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IN THIS ISSUE Thailand: People’s epic Interview: What will it take struggle for the Mun River. to move to a cleaner energy Page 1 future? Page 8 Commentary: Watch out, Colombia: Indigenous peo- Wall Street – your days of ple’s demands have been unaccountable investing may partly met on Urrá project. be coming to an end. Page 2 Page 10 China: Engineers petition Brazil: Experts critique government to delay Three a channelization project. Gorges Dam. Page 3 Page 11 Africa: A Lesotho Highlands Water Supply: India’s Water Project update. recent drought would not Page 4 have been stopped by dams. And privatization in Bolivia Dam Costs: Hydropower is leads to violence. Page 12 neither cheap nor clean.

Page 6

The report is available at www.irn.org at available is report The The National Power Corporation has has Corporation Power National The economically feasible in its own right.” own its in feasible economically

Company of Japan. of Company subsidy … suggest[s] that the project is not is project the that suggest[s] … subsidy

New York, and Marubeni and Kansai Electric Kansai and Marubeni and York, New strate economic viability, the reliance on reliance the viability, economic strate indigenous Ibaloi people. people. Ibaloi indigenous

vate consortium including Sithe Energies of Energies Sithe including consortium vate the private sector participation not demon- not participation sector private the ect will have impacts on thousands of thousands on impacts have will ect

successfully produces power. SRPC is a pri- a is SRPC power. produces successfully power.” He concludes that “not only does only “not that concludes He power.” Cordillera region of Luzon island. The proj- The island. Luzon of region Cordillera

profits from the project whether or not it not or whether project the from profits absence of a market for the produced the for market a of absence be located on the lower Agno River in the in River Agno lower the on located be

reveals that the SRPC stands to gain massive gain to stands SRPC the that reveals even in the event of low generation and/or generation low of event the in even The 345 megawatt San Roque Dam is to is Dam Roque San megawatt 345 The

Power Purchase Agreement (PPA), also (PPA), Agreement Purchase Power compensate the developer during project life project during developer the compensate immediately stop further loan disbursements. disbursements. loan further stop immediately

The review, which analyzed the project’s the analyzed which review, The sidized construction contract which will which contract construction sidized Japan Bank for International Cooperation to Cooperation International for Bank Japan

was well under 3 pesos per kilowatt hour. hour. kilowatt per pesos 3 under well was tor participation, the project is a public sub- public a is project the participation, tor ernment to cancel the project, and for the for and project, the cancel to ernment

average rate charged to Philippine consumers Philippine to charged rate average Dr. White states that “despite private sec- private “despite that states White Dr. ect are campaigning for the Philippine gov- Philippine the for campaigning are ect

tricity purchased. By contrast, in 1998 the 1998 in contrast, By purchased. tricity mental risks and costs. costs. and risks mental NGOs and communities affected by the proj- the by affected communities and NGOs

(US$0.32 to 0.51) per kilowatt hour of elec- of hour kilowatt per 0.51) to (US$0.32 from responsibility for social and environ- and social for responsibility from spent, the dam is just four percent complete. percent four just is dam the spent,

Corporation (SRPC) between 13 to 21 pesos 21 to 13 between (SRPC) Corporation needed. The PPA also frees the developer the frees also PPA The needed. ect’s construction costs have already been already have costs construction ect’s

poration will be paying the San Roque Power Roque San the paying be will poration power purchases even if capacity is not is capacity if even purchases power Although around 40 percent of the proj- the of percent 40 around Although

the US, shows that the National Power Cor- Power National the that shows US, the shortages) and market risk, by guaranteeing by risk, market and shortages) ment should immediately cancel the PPA. the cancel immediately should ment

by Dr. Wayne White of Foresight Associates in Associates Foresight of White Wayne Dr. by logical risk (such as drought-induced power drought-induced as (such risk logical mental costs of power projects. The govern- The projects. power of costs mental

The IRN-commissioned review, conducted review, IRN-commissioned The project risk and liabilities, including hydro- including liabilities, and risk project dened with the economic, social, and environ- and social, economic, the with dened

taxpayers. taxpayers. government carries a large proportion of the of proportion large a carries government mega-profits while the Filipino people are bur- are people Filipino the while mega-profits

deal for Philippine electricity consumers and consumers electricity Philippine for deal it. Under this arrangement, the Philippine the arrangement, this Under it. investors in the Philippines are assured of assured are Philippines the in investors

power is hugely inflated, and will be a bad a be will and inflated, hugely is power buy San Roque power even if it doesn’t need doesn’t it if even power Roque San buy agreement is a clear example of how foreign how of example clear a is agreement

that the cost of the project’s the of cost the that A forces the National Power Corporation to Corporation Power National the forces everything to gain and nothing to lose. This lose. to nothing and gain to everything

project in the Philippines reveals Philippines the in project water available to generate power. The PPA The power. generate to available water Power Purchase Agreement, the SRPC has SRPC the Agreement, Purchase Power

US$1.1 billion San Roque dam Roque San billion US$1.1 SRPC regardless of whether there is sufficient is there whether of regardless SRPC Cordillera People’s Alliance, says, “Under this “Under says, Alliance, People’s Cordillera

new independent review of the of review independent new agreed to pay US$10 million per month to month per million US$10 pay to agreed Joan Carling, Secretary-General of the of Secretary-General Carling, Joan

By Aviva Imhof Aviva By

San Roque Dam Power Purchase Agreement a Bad Deal Deal Bad a Agreement Purchase Power Dam Roque San Stop Press Stop World Rivers Review Volume 15, Number 3 / June 2000

Published by International Rivers Network Thai Villagers Act to Decommission Dams by Aviva Imhof

he movement to decommission Pak Mun and Rasi Salai dams on the Mun River in Thailand has T gathered momentum in recent weeks. Villagers have taken over both dams and are demanding that the gates be perma- nently opened. While both protests have been ongoing for months, events have recently escalated, reflecting the villagers’ mounting frustration with the lack of an official response to their pleas. On May 15, more than 1,000 villagers occupied the Pak Mun Dam crest and fish ladder and intend to stay until the dam’s gates are opened. At Rasi Salai, more than 200 people remain perched in make-shift huts as the waters of reservoir rise around them. They have also vowed not to move until the dam’s gates are opened. Others are starting to remove the dam themselves. xxxxxxxx The government has issued arrest war- rants for 25 village leaders, and the protes- Photo: Pak Mun villagers in the protest camp at the dam. tors fear violent repression from the police. A national and international campaign is mounting to pressure the government to More than 900 villagers have occupied restored and the water salinization problems remain non-violent and to respect the the dam's crest since May 19, 2000. Having be solved. demands of the villagers. given repeated warnings to the government that they would start to take the dam down Pak Mun Rasi Salai themselves if their demands continued to be Two hundred kilometers downstream, frus- Last August, people affected by Rasi Salai ignored, in early June about 500 villagers trated from 14 months of demonstration at Dam established Mae Mun Man Yuen 2 started removing rocks from the road that the Pak Mun dam site with little response protest camp in the reservoir area. In late forms the southern part of the dam. from the government, more than 1,000 May, the reservoir’s rising waters submerged The protesting villagers said they wanted villagers have taken over the dam and fish all houses except one large hut, where 200 to tunnel through the two-lane road to ladder. The takeover was timed to coincide people remained isolated from dry land. reclaim the Mun River. The road was built with the commencement of the fish migra- Chainarong Srettachau, Director of Thai over the old course of the river which was tion season. NGO South-East Asia Rivers Network, said, diverted in 1993 to flow through the dam Thongcharoen Srihadham, a village “There is no good reason for the Rasi Salai spillways. leader, said, “Our experience has proved that Dam’s gates to remain closed. The project is “The road and the dam have changed the the Pak Mun Dam has destroyed the river’s currently useless and likely to remain so. The Mun River channel,” said Chalermchai fertility. It has also destroyed the peaceful reservoir sits on top of a huge salt dome and Champhapan, one of the protestors. “The livelihood of our community. The fish ladder its water is too salty for irrigation. Because of tunneling would return the river to its old which was supposed to solve the dam’s dam- this, Thailand’s Office of Environmental Pol- course. Nature would be restored to the Mun age to fish breeding, could not be a substi- icy and Planning has refused permission for River.” The villagers' demands are that the tute for the natural river. Hence, we are the dam’s irrigation canals to be built. The dam's gates be permanently opened, the demanding that the Pak Mun Dam’s gate be dam’s gates should be opened immediately.” river and the freshwater swamp forest be continued on page 11 Wall Street World Rivers Review Wake-up Call Volume 15, Number 3 n a world of market-driven development, the power and resources of Wall ISSN Number 0890 6211 Street banks largely determines the development paths of the global South. Editor: Lori Pottinger Environmental and human rights activists are embarking on new strategies to discourage the financing of destructive projects. Design/Production: Jeanette Madden I In the past five years, private financial flows to developing countries increased 700 percent, reaching a peak of US$212 billion in 1996. The flow of public funds Printing: West Coast Print Center remained stable at about $50 billion. Even at the lowest point in December 1998, private capital still exceeded public capital by 50 percent. The World Bank and International Mone- tary Fund estimate that private flows will grow in coming years. International Rivers Network Years of persistence and leadership by NGOs have caused the international development Executive Director: banks to enact processes of disclosure and environmental and social criteria. The time has Juliette Majot come for privately funded investment banks to start doing the same. The world’s most destructive river project, the Three Gorges Dam in China, has been a Staff: catalyst for shareholder action on environmental and social criteria. Ignoring warnings by Monti Aguirre, Elizabeth Brink, Selma critics of the massive dam, which will displace up to 1.9 million people and have wide-rang- Barros de Oliveira,Yvonne Cuellar, ing environmental and public health impacts, American investment banks have been eager Annie Ducmanis, Ignacio Fernandez, to help finance the deal through the China Development Bank (CDB). A year ago, several Mary Houghteling,Aviva Imhof, Patrick major banks, including Chase Manhattan Securities and Morgan Stanley Dean Witter, under- McCully, Pamela Michael, Lori Pottinger, wrote a $500 million bond offering for the CDB. An estimated 65 percent of the Three Steve Rothert, Doris Shen, Glenn Gorges Dam budget is financed through loans by the CDB. The CDB has also funded the Switkes, Susanne Wong, Petra J.Yee problematic Ertan and Xialoangdi dams and two nuclear power operations. Although the Three Gorges Dam is so odious that both the World Bank and US Export- Interns & Volunteers: Import Bank have refused to support it, the role of American investment banks in Three Betty Ann Webster, Naomi Beymer, Gorges should come as no surprise. For the past century, they have earned their money the Zola DeFirmian, Belle Kevin, old-fashioned way: with little public scrutiny of their effect on society and the environment. Teerapong Pomun With the investment banking community now widely owned by shareholders and there- fore accountable to them, however, one thing is certain: going public means these banks will Board of Directors: be scrutinized for the social and ecological impacts of their financing. Paul Strasburg (Chair), Following its CDB bond underwriting, Chase Manhattan received a shareholder resolution Philip Williams (President), sponsored by Trillium Asset Management of Boston and moved by IRN, which called on the Dan Beard, Patricia Chang, Bob Hass, company to prepare a report on its environmental and social impacts and how environmental Dorka Keehn, Lauren Klein, Joshua and social criteria could be integrated into the company’s underwriting practices. At Chase’s Mailman,Walter Sedgwick, Brian Smith, annual shareholders’ meeting this past May, IRN encouraged the company’s CEO to consider Francesca Vietor weighing the profits from the bond underwriting against the damage to its reputation. Although Chase’s board of directors voted against adopting the resolution, they did ask Contact Information: for meetings with Trillium Asset Management and environmental groups. It’s too early to say International Rivers Network if Chase’s newly opened door is due to a sudden surge of responsibility or the fact that their 1847 Berkeley Way credit card operations are the largest in the country, and vulnerable to bad publicity. Chase Berkeley, CA 94703 USA might realize that it cannot simply ignore the environmental and social impacts of its lend- Tel:(510) 848-1155 ing for long. Fax: (510) 848-1008 Large institutional investors, including state pension funds and university endowments, E-mail: [email protected] have long been active in supporting socially and environmentally responsible investing, World Wide Web: http://www.irn.org shareholder activism and corporate accountability initiatives. Environmental groups across the US are also educating their millions of members and supporters about the choices finan- cial service consumers have in trying to promote economic and environmental justice. It is unlikely there will be significant changes in the type of projects the banks choose to finance until a sizable threat to their bottom line forces them to make better choices. One example of such a campaign focuses Morgan Stanley Dean Witter, which played a lead role in underwriting CDB bonds and was reluctant to have meaningful dialogue with concerned groups. In April, IRN launched a consumer boycott of the company’s Discover Card credit services (See www.floodwallstreet.org). The investment banks are quick to take credit for industrial growth in the US. Having access to vast pools of capital in the global economy, these banks also have a public obliga- tion to take responsibility for their role in shaping global development. As the proponents and beneficiaries of the free flowing global economy, the time is now for investment banks International Rivers Network is an to incorporate meaningful environmental and social criteria into their lending and under- affiliate organization of Friends of the writing practices. Earth International. Doris Shen

Page 2 World Rivers Review June 2000 China Chinese Engineers Petition Government to Delay Three Gorges Dam by Doris Shen

n March, a group of 53 Chinese Three Gorges Dam at 156 meters for the first senior engineers and academics 10 years of operation. During this time, filed an urgent petition to China’s experts could evaluate the impact of sedi- I leaders to rethink plans for the mentation on navigation and ports at the Three Gorges Dam. reservoir’s uppermost end. If feasible, the The petition warns that filling the reser- water level would then be raised to a final voir as planned could have dire conse- operating level of 175 meters between the quences for hundreds of thousands of people dam’s 17th and 20th year of operation. In living in the Three Gorges area and for navi- 1997, dam officials changed the plans to gation on the Yangtze River. maximize the dam’s power output more Submitted on March 3, 2000, the petition quickly. The water level is currently sched- was addressed to Premier Zhu Rongji, Presi- uled to rise to 175 meters in the sixth year dent Jiang Zemin, National People’s Con- of operation. gress Chairman Li Peng, and Li Ruihan, Three Gorges Dam authorities have Chairman of the Chinese People’s Political announced that two more dams will be built Consultative Conference. About one-third of on Yangtze tributaries upstream of the Three the signatories are former members of the Gorges reservoir specifically to trap the inflow of sediment. Sedimination at the upper end of the reservoir is expected to obstruct commercial navigation. The experts’ “From the beginning, the petition claims the proposed dams will have Three Gorges Dam has been no impact on sedimentation at the reser- Morrow Pat voir’s upper end. a political project, promoted Photo: only by those who would Ongoing Corruption Carrying water near the Three Gorges The petition comes as yet another corrup- have personal financial and tion scandal engulfs the dam. The Hong could sell its output after it began genera- political gain.” Kong South China Morning Post revealed on tion in 2003. Dai Qing May 3 that the head official at the Three International environmental and human Gorges Economic Development Corporation rights groups have targeted global invest- (TGEDC) has embezzled about US$125 mil- ment banks including Morgan Stanley Dean lion. The TGEDC, a subsidiary of the Three Witter, Salomon Smith Barney of Citigroup, Chinese People’s Political Consultative Con- Gorges Project Construction Committee, and Chase Manhattan, CS First Boston and Mer- ference, the official political advisory body supervised by the Three Gorges Resettlement rill Lynch for their participation in under- to the state government. Bureau, went bankrupt in 1999. The compa- writing China Development Bank bonds in The petition, written by Lu Qinkan, a ny, which employed 2,600 people, has January 1997 and May 1999 (see “Commen- leading hydrologist who worked on the ceased operations. tary,” opposite). China Development Bank dam’s feasibility study, calls for a return to This news comes on the heels of a gov- lists the Three Gorges Dam as its top loan the project’s original plan of delaying reser- ernment audit that revealed resettlement commitment. voir filling so that experts would have time officials embezzled about $57.7 million. “From the beginning, the Three Gorges to monitor sediment buildup and to deter- Embezzled money was used to speculate on Dam has been a political project, promoted mine if higher water levels are viable. The stocks, real estate and was transferred to per- only by those who would have personal petitioners argue that this would also pro- sonal accounts. financial and political gain,” says Dai Qing, vide some relief for resettlement authori- Earlier this year, the China Business Times a respected journalist in Beijing and the ties, who are faced with the costly and dif- reported that Yuan Guolin, who until Janu- project’s most outspoken critic. Dai Qing’s ficult task of resettling up to 1.9 million ary 2000 was the deputy general manager of 1989 publication of Yangtze! Yangtze!, a col- people out of the Three Gorges region. the China Three Gorges Project Corpora- lection of essays that promoted debate of Maintaining the Three Gorges reservoir at tion, the company responsible for construc- the dam, resulted in Dai being imprisoned 156 meters would reduce the number of tion and administration of the dam, said for 11 months. Distribution of Yangtze! people who have to be moved by an esti- the corporation would not be floated on the Yangtze! and other criticism of the project’s mated 520,000. stock market because of its economic and impacts is not allowed in China. Public In the original plan, approved by the technical problems. Yuan also said that a access to the state-conducted environmen- National People’s Congress in 1992, engi- review was needed on whether the project tal and social impact assessments is not neers aimed to keep water levels behind the possible.

World Rivers Review June 2000 Page 3 Africa Lesotho Resettlers Demand Improvements in Resettlement Package by Transformation Resource Centre

eople due to be resettled by the most household incomes will be reduced by payment rather than stretched out piecemeal second dam in the giant 60-90 percent. over a period of 50 years. “We want trans- Lesotho Highlands Water Project Concerned about their predicament, rep- parency,” the declaration reads, “We want to P (LHWP) in southern Africa have resentatives of soon-to-be-resettled villages see how much money we have been com- issued a declaration to project authorities met with people who were resettled from the pensated and how much interest that money which, among other things, demands com- Mohale area two years ago. They wanted to is earning … We want to be in charge of our pensation before they move from their hear their former neighbors’ experiences of own assets and to invest our money as we mountain communities to Lesotho’s low- resettlement. During the visits, the already see fit.” lands, and final approval of resettlement resettled people spoke of late and missing They also demand that project authorities sites. The demands are in response to advice compensation payments, the lack of clean respect their cultural norms by resettling ash given them by their former neighbors who water supplies, unfulfilled promises of job heaps (used for medicinal purposes and as were resettled from the area in 1998 for the training, crowded pastures, and hostility burial sites for stillborn children) and by first round of construction on Mohale Dam. from lowland host communities. They granting them access to grave sites which lie Mohale Dam, which is the second of four advised the visitors to demand that all above the inundation zone. They also want LHWP dams to deliver water to South promises related to resettlement be fulfilled to give final approval to the proposed reset- Africa’s industrial heartland, will displace before they are moved out of their homes. tlement sites. “We must be provided an more than 2,000 people before its scheduled “If you wait until after you’ve been moved,” opportunity before resettlement to inspect completion in 2001. Nearly 5,000 hectares of they warned, “you will find you have no the resettlement sites to see if basic necessi- valuable cropland will be drowned by the more power than a toothless dog.” ties are in place, and if we are satisfied with 22.8km reservoir. This represents a signifi- Following the visits, the concerned vil- moving there,” they wrote. The community cant hardship to affected people because, lages sent representatives to an NGO-con- representatives then signed the declaration due to the lack of available land in Lesotho, vened workshop where they discussed their and submitted it to the project authorities. they will be made dependent on cash com- fears about the resettlement process. They The document has sparked controversy in pensation. The most important cash crop in then drew up a declaration which addressed the project areas. The Lesotho Highlands the area is marijuana, which is grown by 70 these concerns. The declaration’s 15 Development Authority (LHDA) and the percent of affected households. Because the demands, in addition to that of compensa- World Bank, which is funding the project’s plant is illegal in Lesotho, it is not included tion prior to resettlement, include a request resettlement, have accused local NGOs of in the compensation policy. This means that compensation be given in a lump sum continued on page 13

ty company with offices in both Lesotho and Lethal Weapon: Lesotho Dam Gets Guns South Africa. When approached for com- by Transformation Resource Centre ment in April, the Principal Secretary in Lesotho’s Ministry of Defence, Matsepo eople living on the banks of Ramakoae, at first said she had been told the Katse Dam’s reservoir in Lesotho emplacements are actually cameras, but later recently reported that what promised to investigate the matter. At press P appear to be three camouflaged time, the ministry said there was no further guns had been mounted at the Katse intake information on the installations. tower. Informants at the dam authority, Meanwhile, local communities are both speaking on condition of anonymity, claim frightened and angered by the development. they are indeed guns, which will be operated “Who is controlling these guns?” asked one, by remote cameras. They said they are “How do I know that it will be safe to herd mounted on swivelling turrets, allowing my animals in front of them?” Another said,

them to fire on anything moving on the Photo:TRC “This is colonisation. South Africa is putting ground or in the air. The informants further These guns mysteriously appeared near Katse Dam. its guns here to take our water.” reported that the South African government TRC continues to investigate the matter is not satisfied with security at Katse Dam It is not clear which of the two govern- and to press the Ministry of Defence and following the political unrest of September ments is responsible for the emplacements. other weapons experts to share the truth 1998 during which 17 Lesotho Defence There is also concern about who actually is about these emplacements. The citizens who Force soldiers and two South African soldiers controlling the equipment, and who will be feel threatened by them certainly have a were killed in fighting near the dam. Katse responsible for deciding on its use. One right to know why the equipment has been was the first dam built in the LHWP and was informant claims they are the ultimate placed beside the Katse road; for what pur- reportedly targeted for potential sabotage responsibility of the Lesotho government pose it is expected to be used; and who con- during the 1998 political unrest. but are actually operated by a private securi- trols its use.

Page 4 World Rivers Review June 2000 Too Many Dams,Too Little Water Lesotho’s Rivers Could Become “Waste Water Drains” by Transformation Resource Centre

ivers affected by the Lesotho According to the report, the dams’ impact the odds that the project will be cost effec- Highlands Water Project “will manifest as strongly deteriorating phys- tive. Either way, South Africa will no doubt (LHWP) could deteriorate to ical and chemical conditions” and major choose the least-cost water supply, which R “something akin to waste-water biological changes. They predict dense algal may not be more dams in Lesotho. drains” if Lesotho delivers as much water to growths throughout the system, which can The consultants present other scenarios South Africa as the original treaty requires. be toxic to fish; encroachment of exotic that would cause less damage to the ecosys- This is according to the final draft of the plants (at the expense of native plants and tem and the humans living in it. One of these Instream Flow Requirements (IFR) study con- the species they support); moderate to criti- scenarios would allow 38 cubic metres per ducted by Metsi Consultants at the request cally severe increases of insect pests which second of water to flow to South Africa while of the Lesotho Highlands Development prey on livestock; reductions in most fish costing less than $571,000 annually to com- Authority (LHDA). The report is intended to populations, with some species like the Mal- pensate for resource losses. The question is inform planners’ decisions about the pro- oti minnow and trout reaching the point of whether the construction of Mashai Dam will posed Mashai Dam, the project’s third dam, extinction; declines in waterfowl, and an remain cost effective to the South Africans if which is currently the subject of treaty nego- explosion in rodent populations, which it means less water for Gauteng along with tiations between South Africa and Lesotho. could affect crops along the riverbanks. high pumping and resettlement costs. The IFR, heralded by experts as being These changes to the ecosystem will have Kwame Oduru, General Manager for one of the most comprehensive ever under- major social impacts. Many fish and wild LHDA’s Environmental and Social Services taken, attempts to predict the long-term vegetable species will be reduced by over 50 Group, said, “We are committed to finding impacts of reduced river flows caused by the percent. Social studies have shown that when an IFR scenario that will balance economic construction of Katse, Mohale, Matsoku, species decrease to this extent, communities and technical feasibility with environmental and Mashai dams. It also recommends com- living near the river no longer make the acceptability.” pensation and mitigation measures. effort to harvest them (it is often a long, The next step in this process is for an Compensation and mitigation will be a steep hike into and out of the river valley). LHDA-appointed independent expert panel, truly formidable task, according to the Therefore, a reduction of 50 percent is effec- the World Bank, and the European Investment report’s authors. Adherence to the treaty tively a loss of 100 percent of these resources Bank will review the draft document first. requirements results in 96 percent reductions to riparian villages – a serious situation given in river flow below Katse Dam and 57 per- the already low nutrition levels in these com- cent reductions where the Senqu River flows munities. The low flows will also increase lev- Corruption Trial Begins out of Lesotho. This translates into “critical- els of pollutants in the river, causing critically The criminal bribery case involving ly severe” biophysical and social impacts severe increases of diarrhoeal diseases like the former chief executive of the that will cost between US$2.8-$4.2 million giardia. Skin and eye diseases are also expect- Lesotho Highlands Water Project and annually to address. Residents living imme- ed to increase sharply, the authors state. The several of the world’s largest internation- diately below the completed Katse Dam cost of cash compensation for lost resources al dam-building firms began on June 5 in already report increased numbers of aquatic and mitigation against public and animal Lesotho’s capital, Maseru. insect pests, and skin rashes after crossing health problems via provision of water sup- The charges relate to the now-com- the low-flowing Malibamatso River ply systems, vaccinations, and VIP latrines plete Katse Dam. Several companies, including Acres International of Canada, will reach nearly $4.28 million annually. Balfour Beatty and Sir Alexander Gibb of Ecological Mayhem In closing, the report’s authors plead for the UK, Impregilo of Italy,ABB (Swiss- Dams tamper with a river’s complicated recognition of Lesotho’s rivers as “living Swedish), Laymeyer of Germany, and changes between low flow and flood as well museums, containing species that could help Sogreah of France, are accused of paying as its delicate chemical composition. These unlock the ancient history of Africa” and as a total of US$2 million in bribes to the changes can trigger a chain reaction of con- “places of great beauty and spiritual renew- then chief executive of the project. Many sequences for the ecosystem, which in turn al” and ask that water resource decision- of the accused firms continue to work impact communities that depend on these makers seriously consider these facts before on the project’s second dam. natural systems. For example, a dam may making further developments in the system. Although most of the companies prevent a flood that would have triggered The draft IFR’s dire warnings put Lesotho have denied the charges, the Financial Times reported on June 5 that the pros- the emergence of insects that would in turn in a difficult position as it continues to rene- ecution is confident it has a strong case: have fed fish that would have provided gotiate the LHWP Treaty with South Africa. “We would not show up in court if we essential protein to children living along a If Lesotho decides to stick to the treaty did not feel we had an ace up our riverbank. Katse, Mohale, and Mashai dams requirements by building Mashai Dam and sleeve,” one prosecution source told the will only allow floods on the average of once delivering 50.8 cubic meters/second to South FT. “If the companies involved say they in a 20-year period (rather than the norm of Africa, the resulting compensation costs may have no recollection of the events, we once a year). Katse affects the Malibamatso render the venture infeasible to South Africa. will show them the payment slips and River, Mohale affects the Senqunyane, and If Lesotho decides to allow more water to the bank records.Then I think they will Mashai affects the Senqu. The Malibamatso flow downstream through its dams, less remember.” and the Senqunyane flow into the Senqu. water will be available to sell, again reducing

World Rivers Review June 2000 Page 5 Dam Economics Neither Cheap Nor Clean The True Costs of Hydro Add Up to a Bad Deal by Patrick McCully

or years, large dams were promot- consultation and project planning and thermal plants, their construction costs are ed on the grounds that they pro- monitoring. extremely high. According to John Besant- vided “cheap” hydropower. Today, The combined impact of the inherent Jones, principal energy economist at the F the argument that hydro is cheap drawbacks of large dams and the competi- World Bank, capital costs represent around is no longer tenable. The costs and poor per- tiveness of other forms of electricity genera- 80 percent of the total life-time cost of formance of large dams were in the past tion (especially natural gas but also wind hydrodams (excluding, as dam cost calcula- largely concealed by the public agencies power) means that only a tiny fraction of tions always do, decommissioning costs). By which built and operated the projects. But the privately funded power plants being comparison, capital costs represent around the true risks and costs of dams are being developed around the world are dams. half the life-time costs of coal-fired plants. forced into the open due to increasing pub- According to a recent World Bank-funded Time overruns can also have a disastrous lic scrutiny and attempts to attract private study, only 2.5 percent of generating capaci- effect on project economics by delaying the investors to existing and new projects. ty under development by the private sector time from which revenues from electricity It is now clear that hydropower can only is hydropower. By comparison, hydro makes sales start to flow. The World Bank notes rarely compete economically with other up 20 percent of the world’s existing that a one-year delay in rev- forms of power generation or energy conser- installed generating capacity. enue earning will reduce the vation measures known as demand-side Dams consistently cost more and difference between the pro- management. The other supposed benefits of take longer to build than jected benefits and costs of dams have been shown to be either unviable projected. some projects by almost a without subsidies (such as irrigation and third; a two-year delay, by navigation) or in many cases not a real more than half. Forty-nine benefit at all (such as “flood hydro projects reviewed control” which has by the World Bank’s wiped out eco- Industry and Energy logically benefi- Department in 1990 cial annual floods took on average 14 while frequently months longer to making extreme build than the flood events more pre-construction destructive). There is estimate. therefore little eco- According to nomic justification for the World Bank, further promotion of the primary cause of cost dam building. and time overruns is poor geological In the early- and conditions, followed closely by resettlement mid-1990s, some dam Inflation- problems. Resettlement costs in World Bank believers saw great oppor- adjusted construction hydropower projects have been on average tunities for dams in the cost overruns on 70 hydropow- 54 percent higher than original estimates. new world of private proj- er dams funded by the World Bank Resettlement commonly accounts for around ect finance. A rash of new between the 1960s and early 1990s averaged a tenth of total costs (before overruns are financing structures known by their catchy 30 percent, almost three times higher than taken into account) and can reach more acronyms – BOTs, BOOs, BOOTs and others the average cost overruns on a similar num- than a third of the total construction cost of – offered creative techniques for raising pri- ber of Bank-financed thermal plants. In gen- dams which displace a large number of peo- vate dam finance. At the start of this new eral, the larger a hydro project is, the larger ple or which involve relatively high com- decade, however, it is apparent that privati- its construction cost overrun in percentage pensation payments. zation has been a massive setback to the terms. In the western US, according to The dam industry’s economic woes are dam industry. Private investors have looked Daniel Beard, former Commissioner of the compounded by a clear trend of increasing at dams and found high construction costs, Bureau of Reclamation, a major federal dam real costs due to the fact that the most eco- serious operational problems such as sedi- building agency, “the actual total costs of a nomic dam sites tend to get used first. And mentation and vulnerability to droughts completed [water] project exceed the original while hydropower’s costs are steadily increas- and floods, and long delays due to public estimated costs, including inflation, by at ing, those of its gas, solar and windpower opposition. The work of the World Com- least 50 percent.” Furthermore, Beard adds, competitors are tumbling. Between 1965 and mission on Dams, due to release its final “project benefits were often never realized.” 1990, according to a World Bank study, the report at the end of this year, is also likely Cost overruns are particularly damaging average cost of building hydrodams rose at to increase dam builders’ costs through rec- for the economics of dams because while an inflation-adjusted rate of nearly four per- ommending stricter standards on public their operating costs are low compared to continued opposite

Page 6 World Rivers Review June 2000 cent per year. While around three-quarters of and runoff patterns in their feasibility stud- Chilean, Canadian and US companies which this cost increase was due to construction ies. Before the current wave of privatization, bought a 61 percent share in the 1,400 MW costs in general rising faster than inflation, dam promoters appear to have believed in Piedra del Aguila hydropower project from the remaining increase was thought to be the predictive powers of hydrologists and the Argentinean government is presumably due to “site depletion.” “hydrological risks” were rarely if ever regretting its purchase. According to the Most analysts working on private sector referred to. Because private investors are con- journal International Water Power and Dam project finance appear to agree that very few cerned with getting their money back, how- Construction, cash flow problems resulting dams will be built without considerable pub- ever, analysts have looked at the generating from factors including drought and low lic sector support, and those which do get records of hydroplants and found that they power prices forced the consortium to built in the private sector will tend to be have regularly produced less power than pre- default twice on payments on its $423m small- to medium-size run-of-river hydro dicted. Private investors are now attempting debt in the first half of 1999. dams. Private funders are loath to take on to pass hydrological risks onto the power Faced with these economic problems and larger dams with reservoirs because of their utilities which buy their power through declining public support, dam promoters are increased costs and greater deals whereby dam operators get paid even claiming that dam building deserves contin- probability of resettlement when their dams are unable to pro- ued public subsidies on environmental and environmental prob- duce any power. These grounds, because hydropower is “clean” and lems. Large multipurpose arrange- “carbon-free.” However, dams have massive- dams like India’s Sardar ly negative ecological impacts and are a Sarovar or Egypt’s Aswan, major reason why freshwater once the pride of the biodiversity is dam industry, have under severe extremely little chance threat around of being built by pri- the world vate investors without (according to a major public subsi- 1999 World dies. This is because Wildlife Fund of their huge con- report, 51 percent struction costs, and of freshwater because their non- species, from fish power components and frogs to river dol- such as irrigation would phins, are declining require large subsidies from power rev- in numbers). Because enues and would divert water from electrici- dams have such cata- ty-generating turbines. ments are a major strophic impacts on Run-of-river dams, however, have their subsidy to private dam operators, riverine, riparian, estuar- own drawbacks, most importantly that their but one which may be largely hidden from ine and even marine low storage capacity seriously reduces their the public. ecosystems, hydropower power-generation ability during dry seasons While the dam industry has found it cannot possibly be considered “clean.” It is and droughts. Run-of-river dams are also less extremely difficult to find private investors extremely destructive. able to produce the supposed ancillary bene- to build new dam projects, they have been Dams are not “carbon-free” as their pro- fits of storage dams such as water supply, more successful in selling off existing state- moters like to claim. Reservoirs emit green- flood control and reservoir fisheries. Promot- owned dams to private buyers, especially in house gases from rotting vegetation. In some ers have historically used these supposed Latin America where numerous dams have cases the amount of gases emitted may be benefits to help justify projects which might been privatized. A major reason why existing considerably less than equivalent thermal not be supported by the public on electricity dams (or in some cases partly built dams) generation, in other cases not. However the generation grounds alone. have appeared attractive to private buyers is huge range of negative impacts of dams dic- One of the main issues which concerns that they have normally been sold at bargain tate that dams, just like nukes, should not be private investors considering dam projects is prices which were set to ensure a successful viewed as part of the solution to global “hydrological risk.” This refers to the possi- sale rather than to reflect the actual costs of warming. This is especially the case because bility that low rainfall periods will reduce building the dams. For example, estimates so many other more socially and environ- power generation and thus revenues. In for the amount spent on the huge (and still mentally beneficial and cost-effective mea- recent years many countries have suffered unfinished) Yacyretá Dam on the border sures exist to reduce global warming such as major reductions in hydropower generation between Argentina and Paraguay vary, but demand-side management, renewables, because of droughts, including Vietnam, $11.5 billion is commonly cited. The long- reducing car use and reversing deforestation. Thailand, Guatemala, Chile, Ghana, Kenya, running debate on privatizing the dam, Limited public funds aimed at mitigating cli- Sri Lanka, Zambia, Zimbabwe, Ecuador, Alba- however, is based on the possibility of sell- mate change should be targeted at these nia and Colombia. Global climate change is ing it for perhaps $1 billion. beneficial investments rather than at the fur- very likely to increase rainfall variability and The keenness of newly deregulated and ther destruction of rivers. unpredictability in future, meaning that privatized power companies to buy up dams hydrological risks will increase. around the world may soon begin to wane Dam Money: Examples of currency featuring dams Hydrological consultants are of course as they gain experience in actually operating from the IRN collection. National pride often plays a supposed to account for likely future rainfall their new purchases. The consortium of big role in dam decisions.

World Rivers Review June 2000 Page 7 There Goes the Will We Squander Our Clean- by Lori Pottinger

Dan Kammen is a physicist, environmentalist, and associate professor in the Energy and Resources Group at the University of California at Berkeley, and director of its Renewable and Appropriate Energy Laboratory. He has written extensively on the opportunities and obstacles to the dissemination of clean energy systems. Here he talks about what we can do to support the adoption of renewable energy technologies.

ment’s integrated investment. This includes large numbers. Thus, this rule does not hold the whole R&D infrastructure given to this for big dams or nuclear power plants, industry by Cold War-era military scientists, because they’re not uniform – each one is a the federal investment in reprocessing unique creation and their lessons don’t nuclear fuel, and the investment in storage transfer from one to the next. Proponents of of nuclear waste. This huge amount of large-scale energy systems say the economics Dan Kammen in Kenya. “shadow support” makes the economic, favor these big technologies, but they ignore technological and political playing field so both this opportunity for learning and cost- WRR: You have written, “Small-scale energy unfair. In the context of competing against declines that are possible in smaller-scale, systems offer viable alternatives to carbon-inten- these entrenched systems, it is remarkable environmentally clean, decentralized energy sive energy sources and could further sustainable that renewables have done as well as they systems. This is yet another example of the development and improve human health … have. (See page 6 for more on the hidden uneven playing field: entrenched support for While small-scale, decentralized systems can costs of hydro.) existing energy systems despite new infor- play a significant role in meeting the combined It’s also the case that any new technology mation and ideas, particularly those that challenges of development and environmental will be expensive on a cost-per-kilowatt link energy and the environment. It’s doubly conservation, there has been a general pattern of basis. That is because you’ve invested in perverse to be investing in these dinosaur neglect of and underinvestment in such sys- research, but haven’t generated many kilo- technologies that are not showing good, tems.” What are some barriers to improving the watts yet, so the new energy source looks solid economics. Today, the cost of nuclear dissemination of these technologies? expensive compared to tried-and-true sys- energy and hydropower is rising; I would tems. You divide the number of kWh by cost call that an “unlearning curve.” DK: The so-called “uneven playing” field is per unit, and if there aren’t many units yet, the fundamental obstacle to our moving to a you get a big number. However, the more of WRR: More than two billion people worldwide future built on clean energy sources. There any technology that you sell, the price goes depend on traditional biomass fuels for the bulk are huge subsidies built in for existing tech- down; and it goes down in a remarkably uni- of their energy needs. What are the environmen- nologies. Renewables – solar, wind, and sus- form way. For every doubling of production, tal and social implications of this? tainably grown and harvested biomass – the price goes down 20 percent. It’s called don’t have these subsidies. Economic com- the learning curve, and it’s due to improve- DK: It had long been assumed that using parisons of emerging techologies never take ments in manufacturing, distribution, and wood was mostly negative for the environ- these biases into account. If you add to the more people getting involved in the indus- ment. While there are places where defor- cost of coal-fired energy the cost of the US try. This is true of almost anything that you estation is a critical issue, primarily where railroad system that made its widespread use can manufacture in a central facility, includ- overpopulation is a problem, it has turned possible, coal looks much more expensive. If ing photovoltaics (PVs) and windmills. But out that in a lot of places, using wood for you look at nuclear energy, the true costs the rule holds only for technologies that can cooking – the average in many developing only appear when you figure in the govern- be manufactured in standardized ways, in nations is a ton of wood per person per year

Page 8 World Rivers Review June 2000 Sun Interview -Energy Future?

– is more or less sustainable. But wood use investing much more into human resources Renewables are coming of age, but on a does have a huge impact on human health. – the support stuff. If you look at companies policy level we are certainly making it as The #1 cause of illness worldwide is not can- like Coke or Pepsi, they invest something hard a birth as possible. We could do a lot cer, malaria or HIV, it’s acute respiratory like 40 percent of their profit stream in more simply by investigating some of the infections (ARI). In areas where I work in advertising, in various forms. The product is policy options that could level the playing Kenya, ARI accounts for 30 percent of all almost secondary to the packaging. To trans- field. We also have to look at the economics hospital visits – twice the rate of visits for late that grossly capitalist message into as seriously as the technical side. People malaria, which is #2. The cause is indoor development projects, we should probably working in renewables are getting more real- cooking with wood stoves, which expose be investing at least 40 percent of what goes istic about what is workable in this global users to huge amounts of particulates – over into a development project into the people, economy. If we can keep the balance alive 100 times the level deemed very unhealthy because in some sense training is the same between the social, technical and economic by US health authorities! We need to move thing as advertising. So let’s take that lesson advances, I do think we can get renewables these people up the energy ladder, to have largely in place, taking up significant frac- them use cleaner and more efficient combi- tions of the power market in both developed nations of fuels and stoves. Those are areas and developing countries pretty soon. where we need more research and field proj- ects. Improved stoves and higher quality WRR: What are the cost barriers to such fuels, if introduced through a process of edu- technologies? cation and collaboration, can dramatically reduce the levels of pollution and thus ill- DK: There are vast opportunities to expand health in developing nations. the market for renewables in both developed One of the ironies of work on energy, and developing nations. To take advantage health, and the environment in developing of these opportunities will require a more nations is that it is seen by industry as an organized effort to jump-start these markets. area of research with no great payoff. We Intelligent policies – both to support often hear that malaria could be controlled research and to encourage and sustain new if only drug companies were willing to to heart, and invest the most in the cus- markets – would make a huge difference. invest a fraction of the funds that they put tomers and in the vendors, entrepreneurs Subsidies can jump-start a market, but must into research for “diseases of the rich.” This and the people who make an industry go. be judiciously used. Some argue when you is even more true for ARI. Kirk Smith, a pro- subsidize the hardware, you distort the mar- fessor here at Berkeley in the School of Pub- WRR: Do you think an energy revolution is in ket, and that is true in some cases. But subsi- lic Health, recently estimated that the total the making, as some renewables experts suggest? dizing training does work. One of my stu- amount of money invested in improved dents here wants to set up a radio show in stoves around the world is smaller than the DK: Yes, I think we’re going in that direc- Kenya that is the renewable-energy version average cost overrun on a typical large-scale tion, but we’re not doing enough on the of “Car Talk” (a call-in show on National hydroelectric dam – about $100 million. policy level or in supporting both basic and Public Radio that answers listeners’ questions This kind of underinvestment is a serious applied research to make it happen very about car problems). People could call in problem. quickly. The joke about many renewables is with questions like “What are the costs of The real challenge is to provide services that they’re 20 years from being commercial- putting up a solar panel on my roof?” to the poor and services to ecosystems that ly viable, and they’ve been that way for 20 One problem is that development agen- are sustainable. For me sustainable in this years. That joke isn’t true anymore. In the cies like the World Bank don’t invest in case means something that goes on beyond US right now the least expensive source for these kinds of long-term support programs. the project. If you want to have a PV or new, installed power is wind energy. Photo- I’ve got a good example of how the Bank wind energy industry, you need to build in voltaics are also both increasing in efficiency approaches training and R&D. One of the support systems so that the industry will not and decreasing in cost. People in Kenya are Bank’s biggest successes is a project it consid- die when the loan or other support goes installing PVs not because of environmental ers something of a failure, based on its eco- away. From our research in Africa and Mexi- concerns, but because they are the best nomic analysis. Right now, Kenya has the co, what that means is not investing 80 per- provider of service, and in many cases the most active PV industry in the world, which cent of the money into hardware. It means least-cost option. continued on page 14

World Rivers Review June 2000 Page 9 South America Indigenous People End Urrá Dam Protest by Monti Aguirre

fter years of pressuring the tional Court had builders of the 340-MW Urrá I ruled that the com- Dam in Colombia to properly pany must negoti- A address the project’s impacts, the ate with the Embera Embera-Katío indigenous people reached an before the Ministry agreement with the Urrá S.A. Company and of the Environment the government on April 19. granted the license, “We are pleased that we came to an which it did not do. agreement, but this is just the beginning of The Embera also the negotiations, since we did not get all we demanded that wanted,” said Kimi Pernia, an Embera they be involved in spokesperson. “We are glad we are back on the planning of our lands, people were very distressed over decommissioning this situation.” the dam in the Negotiations between the Embera and the future. Although company broke down in September. In this point is vague November, after the Ministry of the Environ- in the agreement, it ment granted the environmental license for is perhaps the first filling the reservoir, the Embera launched a time in history that 700-kilometer march to Bogotá to pressure dam-affected peo-

the government to open negotiations. They ples have gotten Photo: Monti Aguirre stayed in a camp at the Ministry of Environ- language about Embera residents at the Bogotá protest camp. ment building for four months. future decommis- Of the 32,000 hectares of land they were sioning into an agreement with project support from them today, due to its now demanding as compensation, the Embera authorities, even as the reservoir is still well-documented impacts. got just 12,880 hectares. But their settle- being filled up. ASPROCIG’s Juan José López Negrete ment on this new land might help prevent The agreement states that the company said, “We didn’t come here to pose moral the construction of a second dam, Urrá II, restore fisheries in the reservoir and water- questions to your company because you which would flood 74,000 additional shed; and that the Embera oversee plans built Urrá,” he said. “We came here to let hectares. In fact, the government agreed to for resettlement, for basin restoration and you know that the construction of Urrá sig- “abstain from promoting, authorizing or management, and to improve their liveli- nifies the slow death of our culture. What building such a project.” hoods. Harm to the river’s fisheries has we are asking is that you learn from the The Embera have proposed that the com- been extensive. experience of Urrá and reform your environ- pany pay them for the contribution their International pressure to support the mental policies so you don’t make the same watershed lands make to the project. They Embera has been building recently. While mistakes in other parts of the world. Even feel they are strategic partners of Urrá, since the agreement was being signed, Embera rep- though you think Urrá is history, we are an estimated 40 percent of the waters that resentative Neburuby Panesso and Juan José counting on your support for the decom- supply the reservoir come from Embera land. López Negrete from the Association of Fish- missioning of the dam, given your technical This element of the agreement remains unre- ing and Peasant Communities of the Greater knowledge,” he added. solved at this time. Lorica Wetlands (ASPROCIG) went to meet In addition to the activists’ trip to The Embera had demanded public recog- with officials from the Swedish Parliament, Europe, the Embera worked with an interna- nition that there had not been a proper con- the Swedish company that built the Urrá tional commission comprised of representa- sultation process, but the government and Dam, project funders and others. The pur- tives of indigenous peoples, human rights the company refused. “We maintain that the pose of the trip, sponsored by the Swedish and environmental organizations, to help environmental license has been granted ille- Society for Nature Conservation, was to seek document the project’s problems. The com- gally because there was not a proper consul- support for affected peoples’ decommission- mission met with high-level government tation process and we will go to the State ing campaign. officials and visited Embera lands in the Council in order to demand its annulment,” Skanska, the Swedish firm that built dam area. The mission concluded that there said a spokesperson. Urrá, was unrepentant about the problems are critical social and environmental The problem began when Urrá S.A. disre- caused by the project. “Urrá is history for impacts which are going unaddressed, and garded traditional authorities and negotiated us,” said Skanska’s general manager. He that information presented by the authori- with a group of Embera who did not oppose added that the project’s consequences could ties as fact is not supported by field observa- the project. The environmental license was not be forecast in 1992 when the company tions. They also noted that authorities are granted on agreements with this group, an signed the contract. Representatives of the not resolving fundamental human rights arrangement that violates Colombian law, as Swedish Export Credit Agency, which pro- and legal issues; and that the project’s envi- indigenous lands transactions must be han- vided loan guarantees for the dam, said at ronmental license was granted in violation dled collectively. Additionally, the Constitu- the meeting that Urrá would have found no of the law.

Page 10 World Rivers Review June 2000 Scientific Panel Finds Flaws in Brazilian Channelization Plans by Glenn Switkes

blue-ribbon panel of eight scien- The experts’ panel also found claims of affect floodplain lakes where fish reproduce. tific and technical experts which economic benefits resulting from the project This would trigger a chain reaction of analyzed the proposed Araguaia- to be based on incorrect interpretation of impacts affecting other forms of aquatic life, A Tocantins Waterway Project, available data. “From the economic point-of- mammals and the human population of the called the “Hidrovia,” has found the project view, the hidrovia makes no sense – suffi- region, which depends on fish as a primary will fail to meet its stated goals of lowering cient, lower-cost alternatives already exist. source of nourishment. transportation costs, and could well cause Constructing the hidrovia would be a waste The project’s potential impacts on indige- irreversible damage to the principal river sys- of public money.” The specialists cited the nous populations have been a source of tem of the Brazilian savanna and eastern already-existing Ferronorte Railroad and heightened controversy. Four of the seven Amazon. The hidrovia, a priority in the North-South Railway (under construction) anthropologists hired to prepare studies for Brazilian government’s multi-year develop- and road links to be cheaper means of ship- the EIA said their conclusions that the proj- ment plan “Advance Brazil,” is intended to ping soy. ect would have serious impacts on indige- deepen and widen the shipping channel The scientists viewed the blasting and nous populations were distorted or simply along 1,782 km of the river system to permit extraction of rocky ledges along the Araguaia omitted in the final EIA text. These and passage of barges hauling soybeans and River to be the most worrisome part of the other irregularities caused a Federal Judge other grains to European ports. hidrovia proposal. Removing these natural last year to suspend the licensing process for In its study, coordinated by the Cebrac dykes, they said, could “destabilize” the river the hidrovia. Foundation of Brasilia, the scientific team system, causing unique ecosystems upstream The Araguaia-Tocantins hidrovia is one of found that the Environmental Impact to dry up (including the Bananal Island, a four large-scale river channelization projects Assessment (EIA) for the project ignored national park and protected wetlands under being promoted by the Brazilian govern- many of the most obvious impacts of the the international Ramsar Convention), and ment. The others would affect the Madeira- project. Different parts of the EIA, they said, causing the river to flow more rapidly below Amazonas Rivers, the Paraguay-Paraná had striking discrepancies in terms of the the blasting, potentially resulting in serious Rivers, and the Tapajós-Teles Pires rivers. All number and intensity of interventions for flooding of downstream riverbank towns. are intended, according to project promot- dredging and rock removal which would be According to the report, the environmen- ers, to lower the cost of soy shipments, prin- needed to channelize the river, as well as in tal changes caused by rock removal along cipally to Europe, where they are used as a estimates of the project’s total cost. the Araguaia and das Mortes Rivers would feedstock for pigs and chickens.

Thai Dams continued from page 1 opened in order to regain the abundance of Dams. The WCD study found that the dam, EGAT. “According to EGAT’s statistics, there the Mun River.” which was supposed to generate 136 are times when the dam stopped generating The response from the government has megawatts, is barely generating 40 and there was no security problem,” he said. been mixed. A group of senators visited the megawatts in the high-demand months of On fisheries, the WCD recorded that 169 area on May 21 and recommended that a April and May. Even in the rainy season, out of 265 species of fish in the Mun River special neutral body be set up to resolve the when water levels are very high, EGAT has were affected by the construction of the issue through peaceful means. The protesters to shut the power plant down because there dam. Of these, 56 species have completely and government have agreed to this recom- isn’t enough head to drive the turbines. disappeared. The WCD estimated that the mendation. A panel has been established, Completed in 1994, the dam’s final cost actual catch in the reservoir and upstream is and its first recommendation is that the was US$265 million, almost twice as much as 60 to 80 percent less than in the pre-dam dam’s gates be opened for three months of originally estimated, WCD reports. Today it era, resulting in an economic loss of around the year during the wet season. At press time isn’t generating enough electricity to recover US$1.4 million per annum. The WCD also the villagers’ response to this was unknown. its investment costs. The WCD concludes confirmed that the fish ladder “has not been Meanwhile, the Thai electricity utility that “it is unlikely that the project would performing and is not allowing upstream EGAT has used underhanded tactics to try to have been built if actual true benefits would fish migration.” force the protesters to disperse, including have been used in the economic analysis.” The hydropower project was financed by sending gangs of drunk thugs to the area Kasetsart University economics lecturer, the World Bank and built by the state-owned dressed as protestors to provoke the villagers. Mr. Detcharat Sukkumnoed, said that utility EGAT. The villagers are also demand- EGAT has also issued statements claiming decommissioning Pak Mun would have a ing that the World Bank take responsibility that the protest could lead to flooding and trivial impact on electricity prices for Thai for its role promoting the project. In a letter power shortages in Ubon Ratchathani and consumers. He said that the economic loss delivered to James Wolfensohn, President of four other northeastern provinces, claims of decommissioning the project could be the Bank, on June 5, villagers demanded that which the protestors say are aimed at dis- reimbursed through a surcharge to be “the World Bank work with the Thai govern- crediting them and pitting them against imposed on users that amounts to a 0.3 per- ment to decomission Pak Mun dam by open- other groups of people. cent increase, which is affordable. He also ing the flood gates permanently and restore An independent study of the Pak Mun said that there would be no interruptions to the Mun River.” As of press time, there had Dam’s costs and benefits has been recently electricity supply in the northeast if the dam been no response. completed by the World Commission on was decommissioned, contrary to claims by

World Rivers Review June 2000 Page 11 Water Supply India’s Drought:Where Has All the Water Gone? by Ashish Kothari

ndia is waking up too late to the hor- communities became apathetic to the main- lages to drought-proof themselves. In Dewas rors of drought. A specter that tenance of check dams and water channels. town of Madhya Pradesh, an enterprising should, and could, have been ban- The rapid erosion of the earth’s power to district collector has encouraged roof-top I ished long ago is again stalking the retain rainwater is the second part of the cri- rainwater harvesting, substantially reducing land. As images of desperate farmers and sis. In the past, even arid lands had exten- dependence on scarce municipal supplies. nomads migrating in search of water and sive scrub vegetation which covered the land These are also striking examples of devel- fodder, skeletal remains of starved cattle and acted as a sponge for the meager rain opmental and attitudinal changes. In many on parched land, and queues of water- that fell, recharging aquifers, wells and places that have proved well-adjusted during vessel-bearing women are splashed across streams. It is no surprise that the well-forest- the drought, the limits of nature are well- newspapers and on television, the question ed tracts in the drought-hit areas of recognized. Farmers have taken a pledge not naturally arises: where has all the water from Rajasthan, Gujarat and Maharashtra face less to plant crops like sugar cane which are the past 12 successive good monsoons gone? water shortage than areas where the land’s water-intensive. Villagers in Mendha, Maha- The rain has fallen on increasingly barren vegetative cover has been destroyed. rashtra, decided to have a community well lands, devoid of forests and other vegetation, with strict regulations on pumping, as they where it runs off quickly rather than perco- Uneven Distribution had seen farmers in another district suffer late into the ground to recharge wells and Finally, it has become clear that it is often the consequences of over-using private aquifers. The rain has fallen on small check- not the absolute quantity of water that is borewells. The more empowerment of com- dams that are unable to retain it because lacking, but its skewed distribution amongst munities to manage their resources, the less they have silted up due to neglect. All the consumers. Shamjibai Antala, who has pio- the chances of misuse and bad decisions resources which should have gone into pre- neered innovative methods of recharging being tolerated. venting deforestation and other forms of wells in Saurashtra, says industries in this Huge amounts of money have been spent land and water mismanagement have gone region used 300 million liters of water a day on drought relief in Rajasthan in recent instead into grandiose schemes of big dams even during the current drought. The social droughts. Yet the situation is hardly better. and canal networks, which have simply not action group Disha has estimated that the There is little doubt that if this kind of delivered in proportion to what they cost. Gujarat government spent over US$61 mil- money had been put into decentralized Whatever rainwater has been retained by lion on drinking water in 1998-99, yet most alternatives, into the hands of community rivers or seeped into aquifers has been quick- of the arid regions of the state are facing institutions, and into long-term drought- ly sucked up by big cash-cropping farmers, serious drought this year. Where, asks Disha, proofing measures, the results would have cities and industries, leaving very little for did the money go? The answer is simple: the been vastly different. In Kutch, for instance, small farmers and other rural poor. The cur- government has siphoned all the money a coalition of 14 NGOs has drawn up a rent drought is a combination of debilitating allocated for these and other decentralized plan to ensure adequate water for the centralization of power, adoption of mega- projects into the pipe-dream that is the Sar- whole district. solutions to micro-problems, neglect of the dar Sarovar project on the Narmada River. It is time that we learn from the shining critical role of forests, and pandering to the The dam, even if it does get finished, will examples set by NGOs and sensitive officials, ever-increasing demands of large farmers, provide water to only 10 percent of the most and demand that: urbanites and industries. drought-prone regions of Gujarat. There is nothing new in the monsoons Also instructive is the example of dozens • Governments facilitate the empowerment failing. Subnormal rainfall for years at a time of villages and regions that have withstood of communities to harvest and manage has always been a part of human existence, the current drought and now stand out like water resources, and put its full resources yet for thousands of years, communities oases. This is no quirk of nature. Several into decentralized structures; learned to adapt. They built ingenious water hundred villages in Alwar district of • Cities and industries be forced to harvest harvesting and retention structures and used Rajasthan are bearing up despite the failure their own rainwater and recycle waste- water sparingly. Villages considered water of the rains, because over the past 15 years water, rather than mine rural areas; sources as common resources to be collec- their residents, along with the NGO Tarun • All existing forest areas be protected as tively managed. Bharat Sangh, have built several thousand water catchments, and degraded lands be Centralization of power in the pre-colo- small checkdams that have recharged wells afforested. nial and colonial periods saw rapid changes and underground aquifers, and even brought in traditional systems. The responsibility of dying rivers back to life. In Maharashtra, vil- Perhaps then we will not have to wake up managing small waterbodies passed from the lages like Ralegaon-Siddhi and Manegaon to another rude reminder that it is not nature local communities to centralized state agen- have become famous for having eradicated that has been unkind to us, but our own cies. The concept of water as a “national water scarcity. In Saurashtra, wealthy busi- short-sightedness and skewed priorities. asset” was used to justify this transfer, as if nessfolk from Mumbai have pitched in to the local community could not be trusted fund the construction of water harvesting The author is an environmental activist in with “national” property. Disinvested of structures. In the same region, the Aga Khan India. This article originally appeared in The their customary powers and responsibilities, Rural Support Programme has helped vil- Hindu, May 14, 2000.

Page 12 World Rivers Review June 2000 Privatization Leads to Water Wars in Bolivia by Glenn Switkes

ollowing mass demonstrations water rate increases of as much as $20 per tariffs in Cochabamba,” arguing that all which resulted in 6 deaths and month threatened to severely burden the water users, including the very poor, should 175 wounded, a popular uprising poorest sectors of society. The rate increase have bills that reflect the full cost of pro- F against water privatization in affected some 500,000 citizens. People took posed expansion of the local water system. Cochabamba and a new national water law to the streets in protest. World Bank President James Wolfensohn, succeeded in forcing the Bolivian govern- The demonstrations were also directed when asked about the Bolivia protests at a ment to tear up its contract with a multina- against a new water law which, among other press conference, said that giving public tional consortium. things, charged users a fee for the right to services away for free inevitability leads to Protests began after the September 1999 dig wells. waste and that countries like Bolivia need signing of a contract between the Bolivian Following the outbreak of mass protests to have “a proper system of charging.” government and the Aguas del Tunari con- in Cochabamba, police responded in a In the wake of the protests, a group of sortium, headed by the San Francisco-based heavy-handed way. With more than 10,000 international NGOs has called on the engineering giant Bechtel and including the farmers blocking roads, and strikes and World Bank to halt its support for water Italian group Montedison, the Spanish con- marches escalating in other cities including privatizations. struction company Abengoa, and Bolivian the capital La Paz, President Banzer decreed Were there alternatives to the privatiza- engineering and construction companies martial law. Police used teargas, clubs, and tion of the Cochabamba water system that with close links to the government of Presi- rubber bullets to subdue protesters. Protest the World Bank might have recommended dent Hugo Banzer. leaders summoned to a negotiating meeting instead? The Bank was well aware of Bolivia’s For years, Cochabamba has suffered water with municipal officials were summarily successful Santa Cruz water cooperative rationing. The Bolivian government was rounded up and arrested. (SAGUAPAC), which efficiently supplies advised by the World Bank that this situa- The Bolivian government, which had said water to a million people and has since been tion could only be remedied by privatizing it could not rescind the contract without duplicated in two other Bolivian cities. A water services. The controversy centered paying a stiff fine, finally gave in, and the World Bank report on urban water systems around the Misicuni Multiple-Purpose Proj- Bechtel engineers quietly fled the country. in Bolivia called SAGUAPAC “one of the best ect, which included drilling a tunnel to According to Maria Teresa Vargas of the water and sewerage companies in Latin bring water from the highlands to the city, Rios Vivos Coalition, “The water crisis came America.” While the Bank has provided construction of aqueducts for irrigation in at a time when Bolivia has fallen into a seri- loans to SAGUAPAC, it has never promoted the surrounding rural area, and eventual ous economic crisis, with increasing unem- the co-op model, instead promoting privati- construction of a hydroelectric dam using ployment and extreme poverty. The issue zation as the model of choice. In fact, the water being tunneled from the mountains. of water struck deep, requiring rural commu- Bank instead chose to support a technical In exchange for building the Misicuni nities to pay for services that until now assistance project for regulatory reform and complex, the Bechtel consortium would were free.” privatization of Bolivian water utilities that have the right to a guaranteed rate of return The World Bank’s policies helped set the intends to “convert water co-operatives into that prompted them to raise water rates by stage for the violence. In its June 1999 corporations with private investment in between 100-300 percent. In a country “Bolivia Public Expenditure Review” the order to comply with investment and opera- where most of the population earns a mini- World Bank wrote that “no subsidies should tional requirements.” mum wage of less than US$100 per month, be given to ameliorate the increase in water

Lesotho Resettlement continued imposing their views on affected communi- and approve the resettlement sites after ginalised people of this world need not be ties and of causing “confusion” and a “com- LHDA deems them complete; they ask that afforded the same consideration as those of plaint culture” among community members. their cultural norms be respected; and they us who have been ‘educated’ and are lucky In a recent letter to the World Bank, Mot- want the right to manage their own assets. enough to fly across oceans to decide the seoa Senyane, coordinator for the Lesotho Are these not things that any person facing fate of those less fortunate.” NGO Transformation Resource Centre, wrote the prospect of forced removal from her/his In response, Andrew Macoun, the World to the project task manager at the World home and land would reasonably and right- Bank task manager for the project, said, “We Bank about the accusations: “Why should fully request? Are we to assume that World are fully aware of the disruption resettlement the LHDA and Bank be reluctant to min- Bank and LHDA staffmembers would not causes and are committed to ensuring that imise the tremendous disruption that is feel they are entitled to these things if put in those affected by the LHWP are treated fairly resettlement? In the declaration, communi- the same situation? We doubt it … Com- and compassionately. The terms of the treaty ties ask to be compensated before they reset- ments and attitudes expressed on the Bank’s concerning resettlement and compensation tle; they ask for the opportunity to inspect recent visit reveal an attitude that the mar- will be fully implemented.”

World Rivers Review June 2000 Page 13 Interview continued from page 9 is an amazing achievement. The Kenya mar- WRR: Have you experienced a prejudice toward needs to be more examples of this, because it ket has 40-50 companies vying for sales, or resistance to renewables by those making can put power into the hands of small-scale there are more people on solar than on the decisions about energy in developing countries? industry and families, without requiring national grid, and it’s all been unsubsidized them to assume the burden of supporting a private sector. In the early ‘80s, the World DK: Yes, and the examples are unfortunately large national power project. Bank’s ESMAP [Energy Sector Management all too numerous. Some governments are And yet it’s not really the lack of energy, and Assistance Program] invested quite a lot reluctant to subject the national utilities to but inefficient or inequitable energy services, of human resources in Kenya to train people competition from stand-alone or mini-grid which are holding back poor communities. to use and install PVs. When the Bank systems. And many seem to see renewable There are ways to get the same amount of reviewed the program a few years later, its technologies as homespun, small-scale, sec- energy services from smaller amounts of economists said, “This money didn’t go any- ond class. Many people seem to think that energy. It is important to recognize that where, there’s no PV industry, the people we connecting to the grid is more advanced things like a refrigerator or water pump will trained went into other fields. Not a good than having their own local power supply. use a lot of power, and some of those needs investment.” But if you look at Kenya’s PV In Kenya, that is changing, because people can be served better not by increasing the market today, many of the industry’s impor- see the quality of the service of PV systems – amount of voltage that comes into your tant players were first introduced to solar it comes without a monthly bill, without home, but by converting to mechanical through that ESMAP program. having to burn kerosene, and without the power where feasible. For example, an effi- I think this program was a great success, blackouts that are becoming more common cient mechanical water pump, such as a ded- and should be one the Bank learns from, in Kenya. That’s why Kenya is selling some- icated windmill, is almost always the least replicates and adapts. They took a small thing like 20,000 PV systems a year. expensive solution. Another example: both amount of funds and invested heavily in in California and parts of Kenya, the most training, and some in technology. It just WRR: IRN is working on the Bujagali Dam efficient way to heat water is not grid-based happened that they invested in a technology project in Uganda that was subject to evaluation hydroelectricity or a solar PV water heater, well before it was cost effective, and that’s with a study that purported to look at energy but a solar thermal system – a tank on your why there was a 15-year lag before it took alternatives for Uganda. The study was done by roof. It’s cheaper, more reliable and more off. Right now they could do similar pro- a dam-building company and mostly looked at efficient. grams with technologies that are much clos- various hydro alternatives. In this study, solar er to being commercially viable. They could was found to be not financially viable for Ugan- WRR: Many who follow the ongoing privatiza- do a program training people how to use da, despite neighboring Kenya’s huge successes tion of the world’s water systems argue that all wind power, or they could analyze what with solar. people have a right to water – at least a mini- cities in the world could convert quickly to mum amount. Do you think people should also using fuel-cell powered vehicles. These kinds DK: I actually know that case pretty well. have a similar right to a minimum amount of of programs could bear fruit in just a few There is no comparable analysis of rural PVs energy? years. But all this requires the Bank to invest in Uganda that is as extensive as that which far more in education, training and research. shows the possible benefits of this dam. By DK: On one level, the answer is absolutely doing one study and not the other, you yes. More energy, up to a point, inevitably WRR: Give an example of how a modest guarantee that the one with the most detail leads to a better quality of life – increased lit- investment could have a big impact in helping to is the one you favor, because it’s better docu- eracy rates, increased life expectancy, get such technologies wider use. mented and analyzed. It’s dishonest to inves- increased number of years of students in tigate technology “A” for a year and technol- schools, etc. Unlike water, we’re not limited DK: I can think of a few, and they’re easy. If ogy “B” for a day and then conclude that by the amount of energy that’s out there to you’re going to fund a given area in the technology “A” is better. This case also be harvested. We could run the global sup- energy sector, fund it for a decent amount of reveals the problem of a lack of participation ply of energy just from photovoltaics if they time, to avoid the roller-coaster funding in the decision-making process on energy were cheap enough; there is more than cycle that we now have on the research side. projects by people who could provide alter- enough solar power striking the earth. What Don’t try to pick winners in advance – for native energy sources and people who will we need to do is find the way to harvest it example, don’t let your favorite fuel compa- use the energy. It is also a classic case of pre- efficiently. ny suggest in detail what area you’re going serving the uneven playing field. So ramping up the amount of energy per to invest in. Compete various options person – up to about the equivalent of two together. The US loves individual winners, WRR: It seems like the lack of energy is holding tons of oil per person per year – improves but that’s wrong for energy. In energy you back poor communities in the way that a lack of quality of life. Above that amount, the corre- win by having a diversity of sources that capital does. Should there be a “Grameen Bank” lation between quality of life and energy use each provide energy services and may each to offer microcredit for small-scale energy tech- flattens out. The US standard of living is be well suited to different economic, envi- nologies? pretty comparable to that of Japan, and yet ronmental and social situations. Sustaining Japan is about half as energy-intensive as we the training and the learning after the tech- DK: There already is one – “Grameen Shak- are. They’ve found ways to provide the same nology is installed is also critical. For exam- ti” in Bangladesh provides microcredit for services for less energy. So at these higher ple, a clearinghouse for training and infor- solar panels, to wire homes, and other proj- levels of consumption, policy matters a lot – mation sharing in PV systems in Kenya ects. And in Inner Mongolia small-scale how you use it, how you plan for it. One would be immensely valuable. It would be a wind turbines – developed through a public- does not have to grow into an energy-con- trivial investment, and it would ensure that private partnership – provide power for the suming monster like the US to have a US information flow matched technology flow. majority of the nomadic population. There continued opposite

Page 14 World Rivers Review June 2000 • Lesotho Highlands, where a US$2m case Brave, New World of Electricity of dam bribery involving 20 or more for- Transforming Electricity by Walt Pat- eign firms is now underway in a local terson (Earthscan, London, and Brookings court; Institute,Washington, DC; 1999) • Chixoy, where Guatemalan armed forces Those of us with grid-based power take massacred more than 400 Maya Achi it for granted that the lights will always go New Dams Report Criticizes indigenous people; European Corporations on when we flip a switch.The 2 million peo- • Pangue and Ralco in Chile, where local ple in the world currently without power European corporations are violating peo- people were not consulted before the despair they will never get it.This impor- ple’s rights and ruining ecosystems around projects were started; tant, eminently readable book shakes up the world by exporting dam technology conventional notions about power genera- • Three Gorges, which will result in forcible that has been discredited in their own tion for people on both sides of the elec- resettlement for up to 1.9 million Chi- countries, says a new report. tricity divide. nese people. The report, Dams Incorporated:The Walt Patterson believes that in a few Record of Twelve European Dam Build- The report notes:“Not only have the years, the electricity industry as we know it ing Companies, was written by the UK companies continued to remain involved in will undergo radical transformation, not group The Corner House and published by projects where human rights abuses have unlike the changes in the computer industry the Swedish Society for Nature Conserva- been demonstrated or where resettlement in the past 20 years: tion. It calls for laws to curtail the industry’s plans have been inadequate, they have in “Long-accepted ground rules for tech- “power to oppress,” including holding them many cases actively promoted such projects nology, fuels, ownership, operation, manage- to their home country’s tougher environ- against local opposition and often in contra- ment and finance are changing by the day. mental, social and economic standards when vention of their own corporate environ- Technical innovation is altering options and working overseas. mental guidelines.” priorities. Environmental constraints on tra- The report analyzes the record of firms “Many dam-affected communities are ditional technologies [including dams] are that have built, or are building, some of the now calling for reparations,” the report tightening inexorably.The balance of fuels is most destructive dams in the world:ABB goes on. It is time to hold Europe’s dam changing; so is the allocation of risks. Heart- (Swiss-Swedish), Balfour Beatty (UK), Coyne building companies accountable for their stopping sums of money are changing hands. et Bellier (France), Electrowatt (Switzer- past. It is also hoped that a knowledge of Power and influence are at stake … Two bil- land), Impregilo (Italy), Knight Piesold (UK), the record of European dam builders could lion people are watching from the sidelines, Kvaerner (Sweden), Lahmeyer (Germany), help European citizens who are demanding waiting for electricity. How did the world Siemens (Germany), Skanska (Sweden), that the companies which operate from electricity come to this, and where might it Sogreah (France) and VA Tech (Austria). their countries, often with the backing of go from here? The question is too impor- The report analyzes the companies’ role tax-payers’ money, and certainly with their tant to leave to insiders.” in the following dams: governments’ blessing, are held accountable Patterson describes a future based on a • Itaipu and Yacyretá, the most infamous for their actions abroad.” diverse, highly efficient, decentralized elec- trical system which takes us away from the examples of hydro-corruption, on the The report is available for US$12 from: polluting, large-scale, centralized systems we border of Paraguay and Argentina.The Swedish Society for Nature Conservation rely on now. He says that “bigger is better” combined cost of the two dams was Box 4625 for energy supply “is now comprehensively more than $30 billion – it should have SE-116 91 Stockholm, Sweden discredited,” noting that smaller stations are been a little over $7 billion; Tel +46-8-702.6509 easier to site, and can be built and produc- email: [email protected] • Ilisu, a Turkish dam that opponents say is ing power more quickly. being used as part of a strategy to eradi- Web: www.snf.se cate the Kurds as an ethnic group;

Interview continued quality of life. That’s the energy holy grail – about a quarter of the world’s energy budget pen. The interesting thing is that the oppor- to increase energy use dramatically without right off. Closing down our large, dirty fos- tunities to move from a pollution-intensive doing it by mimicking the US. sil-fuel plants could be done if we invested energy economy to one based on cleaner significantly in new sources, or had a modest energy sources is a wide-open field. Any for- WRR: Describe your vision for an equitable carbon tax to ramp up the work that’s being ward-thinking company could invest a mod- energy world. done on wind, solar and fuel cells. You could est amount now in photovoltaics, wind, or cover all of the US energy supply by cover- fuel cells, and open incredible new avenues DK: With the range of clean energy options ing rooftops with roofing tiles and shingles for itself, and for society. The key question is we have now, and the economic and policy that were PV systems themselves. We would this: which companies, governments, and lessons we have learned, it would be neither do much better economically, socially, and community groups are going to take on that difficult nor overly expensive to shift the environmentally to have an energy system vision, and are we going to implement poli- energy industry from the current systems of that is safe, clean and distributed rather than cies to make this route attractive? large power plants to a small-scale, distrib- centralized. A basic reason we haven’t made uted one. For example, using biomass wastes more progress in this direction is that the For more information about the Berkeley RAEL in various ways could probably account for fossil fuel industry doesn’t want it to hap- program, see http://socrates.berkeley.edu/~rael

World Rivers Review June 2000 Page 15