LARGE-SCALE WATER STORAGE IN THE WATER, ENERGY AND FOOD NEXUS PERspECTIVES ON BENEFITS, RISKS AND BEST PRACTICES Andreas Lindström, Jakob Granit Edited by Josh Weinberg PAPER 21 STOCKHOLM, AUGUST 2012 List of Abbreviations ADB Asian Development Bank OECD Organisation for Economic AfDB African Development Bank Co-operation and Development EIRR Economic Internal Rate of Return RE Renewable Energy ENSAP Eastern Nile Subsidary Action RRFP Regional Rusumo Falls Hydroelectric Programme Power Project EU European Union SEA Strategic Environmental Assessment FIRR Financial Internal Rate of Return SSEA Strategic/Sectoral Social and HEP Hydro Electric Power Environmental Assessment HSAF Hydropower Sustainability Assessment TWh Terawatt hour Forum UN United Nations ICOLD International Commission on Large UNDP United Nation Development Dams Programme IEA International Energy Agency UNEP United Nations Environment IFI International Financial Institution Programme IHA International Hydropower Association US United States IWRM Integrated Water Resources USD US dollars Management WB World Bank kV Kilovolt WCD World Commission on Dams LEPA Low Energy Precision Application MW Mega Watt NBI Nile Basin Initiative NELSAP Nile Equatorial Lakes Subsidiary Action Programme How to site: Lindström, A., Granit, J., Weinberg, J. (2012). Large-scale water storage in the water, energy and food nexus: Perspectives on ben- efits, risks and best practices. SIWI Paper 21. SIWI, Stockholm. Acknowledgments The authors would like to thank peer review input from Klas Cederwall, Anton Earle, Anders Jägerskog, Karin Lexén, Rickard Liden and Bernt Rydgren. Disclaimer The analysis and policy recommendations in this report do not necessarily reflect the official view of SIWI. The authors take full responsibility for the content and findings in the report. SIWI Paper 21 Published August 2012 by Stockholm International Water Institute (SIWI) Design by Elin Ingblom, SIWI. Cover photos by Jakob Granit, SIWI. For electronic versions of this and other SIWI publications, visit www.siwi.org. Table of Contents Key Findings 4 1. Introduction 5 2 A Typology of Storage Functions in the Water-Energy-Food Nexus 7 2.1 Irrigation 7 2.2 Hydropower 9 2.2.1 Storage hydropower 10 2.2.2 Run-of-the-river hydropower 10 2.2.3 Pumped storage hydropower 10 2.3 Water supply 11 2.4 Flood control 11 2.5 Multi-purpose use 12 2.6 Tailings storage 13 3 Risks and Trade-Offs from Water Storage Schemes 15 3.1 Environmental impacts 15 3.1.1 Flow regimes 15 3.1.2 Sedimentation 15 3.1.3 Aquatic ecosystems and fisheries 15 3.1.4 Evaporation and greenhouse gas emissions 16 3.2 Social impacts 16 3.2.1 Health 16 3.3 Dam safety and flood risk management 17 4 Lessons Learned and Best Practice in Water Storage Development 18 4.1 Assessing opportunities, options and risks in the initial planning stages 19 4.1.1 Addressing climate change and rainfall variability 20 4.1.2 Strategic multi-sector and environment programme assessment 20 4.2 Stakeholder involvement and project preparation 22 4.3 Resettlement and compensation 23 4.4 Environmental mitigation measures 24 5 Transforming Developing Trends to Opportunities 25 6 Conclusions 27 7 References 28 Key Findings This report provides an overview of the current status of large scale artificial water storage development and its functions in the water, 3. Environmental and social consequences at the local and energy and food security nexus. The objectives of this analysis regional levels need to be addressed up-front when develop- are three-fold. It presents a typology of water storage structures ing water storage. Issues of resettlement, compensation and in order to give an overview of the different storage options, the environmental degradation are critical factors to consider in all benefits they provide and how they can contribute to develop- water storage projects. In many cases, projects will affect people ment. This is followed by an analysis of the risks and trade-offs and ecosystems, often significantly. Consequences can include posed by different storage options that must be evaluated in the livelihood losses, impacts on traditional and cultural values, planning and operational stages. The study then highlights best and degradation of public health. Compensation for individuals practices and lessons learned from past experiences that can help and communities has been inadequate in some cases. Successful guide efficient and sustainable implementation of storage projects. strategies to engage local populations can provide guidance To conclude, it explores emerging opportunities for water storage when planning new projects and help create new and meaningful schemes to enhance water, energy and food security in the future. livelihood opportunities for people that are affected by storage The following five key findings provide perspectives on benefits, construction. risks and best practices of water storage in the water, energy and food nexus. 4. There are several ways to mitigate negative impacts from water storage in the project design, implementation and initial 1. Large-scale water storage supports economic development, planning stages. Environmental and social impacts should be builds water security and buffers against increasing rainfall addressed through proven governance and technical solutions at variability. Several examples from around the world demonstrate the early planning and design stages. Strategic Environmental how water storage has supported rapid socio-economic Assessments (SEA) are, for example, gaining increasing attention development in many regions and countries. Increases in irrigated globally as an instrument to identify environmental and social agriculture land areas have fostered greater food security and issues in major development programmes and incorporate strate- electricity generated from hydropower have contributed to large gies to address them into the planning, project development and scale grid-based electrification to boost industrial outputs and investment finance process. This includes engaging representa- contributed to economic growth and human development. tives of populations that will be affected by storage construction Hydropower plays an expanding role in integrated power systems early in the planning process, and maintaining their involvement and can enable increased use of intermittent renewable energy throughout the detailed project design (pre- and full feasibility) sources such as wind and solar power. Hydraulic infrastructure and implementation stages. Methods and techniques to ensure and water storage also play an important part in protecting people good project planning and stakeholder engagement tools have from the impacts of unpredictable hydrological variability, floods been developed actively since the World Commission on Dams and droughts. produced its industry benchmark report in 2000. 2. Well-designed water storage and hydropower systems 5. Expected benefits from initial stages of storage projects can enhance both climate change adaptation and mitiga- plannings may at times promise too much, but there are also tion, but such systems must also plan for a more extreme and cases where outcomes exceed expectations. Many water stor- variable climate. Integrated regional system planning for water age structures do not reach their expected potential predicted at and energy use can support a transition to decarbonise the en- pre-commissioning stages. Social and environmental trade-offs ergy supply chain and provide solutions to meet growing energy may overtake the economic benefits. Hydropower dams, how- demand. While water storage sites do produce some greenhouse ever, exceed the target set for economic returns and development gases, their emissions are much lower than conventional fossil outcomes more than any type of other water storage. Existing fuel. More research is needed on greenhouse gas emissions from hydropower electricity generation capacity can also be improved reservoirs and possible solutions to reduce them. Hydropower through technical upgrades during the project’s life-cycle. Reasons can be developed to mitigate climate change through wider use for lower than expected outputs for other storage types are often of renewable energy sources. Existing and future dam and storage consequences of gaps between the initial planning assessments assets need to consider the impacts of climate change induced and actual carrying out capabilities in subsequent project stages extreme weather conditions and changes in run-off variability. of water storage projects. This can ultimately lead to chronic Efficient modelling and planning, including reliable forecasting operational problems. Increasing the efficiency of existing stor- of different scenarios, will play a vital part in present and future age schemes provides a major opportunity for increasing output project development. In many places, well designed large scale through improvements in water storage technology. water storage development is a strategic management response to establish water security and adapt to long-term climate change. This requires, however, thorough options and impact analysis to determine if a storage project is a viable choice. 4 1. Introduction Artificial water storage has, and will continue to have, a large role to schemes regulate and deliver water in a timely manner for multi- play in both emerging and mature economies. The ability to treat, ple uses. But they can also disrupt ecological and social systems. store and manage