http://www.trust.org/item/20140310145259-k4qaw/?source=hpbreaking
Mega-dams economically unviable - Oxford report
Source: Thomson Reuters Foundation - Mon, 10 Mar 2014 02:52 PM
Author: Samuel MintzMore news from our correspondents
LONDON (Thomson Reuters Foundation) — Most large-scale dam projects do more
economic harm than good due to poor or dishonest planning - and their
skyrocketing costs could play a role in crippling the fragile economies of
some developing countries, a study by Oxford University’s Saïd Business
School charges.
By the time it is finished, the Belo Monte Dam being built in Brazil’s
Amazon will cost $27.4 billion, and China’s Three Gorges Dam is set to cost
the Asian superpower $26 billion over the next 10 years, the study
predicted. In Pakistan, building the Tarbela Dam boosted the country’s
external debt by 23 percent between 1968 and 1984, it said.
But Richard Taylor, executive director of the International Hydropower
Association, said he disagreed with many of the report’s findings, calling
its central claim “complete nonsense.”
Countries around the world, from Laos to Ethiopia, are pushing ahead with
plans for mega-dam projects, after a 10-year hiatus in which such projects
were seen as poor choices for solving problems and funding largely
disappeared.
In part, the surge in dam building is designed to help produce “green”
hydropower to meet growing energy demand and avoid boosting
climate-changing emissions from growth in the use of fossil fuel energy
plants. As climate change brings more irregular rainfall, dams in some
regions also are seen as a way of storing water, controlling water flows
and managing droughts and floods.
Taylor said four out of every five dams in the world are today used
primarily for water management, with many also providing energy to nearby
communities.
But the benefits of these projects are a matter of some debate. The Oxford
report claims that the hard-to-measure results produced by big dams rarely
make up for big costs and long timelines.
For the report, a group of researchers at Saïd Business School evaluated
the viability of modern mega-dam projects. Led by Bent Flyvbjerg, a leading
expert on megaprojects and economic decision-making, they studied 245 dams
built between 1937 and 2007 for an article in the journal Energy Policy.
What they found is that in most situations, large hydropower dams are
likely to be too expensive and take too long to build to deliver a
“positive, risk-adjusted return.” This is something dam project planners
should be able to predict if they compared their plans with historical
records of dam construction, according to Flyvbjerg.
“Basically, what planners of dams today do not do is to benchmark their
plans against the actual outcomes of already completed dams,” he said. If
they did, they would see that large dams almost always overrun their
projected costs and schedules, sometimes by considerable amounts, he said.
An example is Brazil’s controversial Belo Monte dam, which was initially
given a $14.4 billion price tag but is currently projected to cost $27.4
billion by the time it is finished.
Dam planners’ projected budgets have not gotten any more accurate in the
last 80 years, the report said – something Flyvbjerg called a “surprising
result.”
“You would expect professionals in the field to improve their predictions.
Our data go back 80 years for dams and 70 years for transport projects, and
show very clearly no improvement,” he said.
Taylor, the hydropower association executive director, said that he is
certain predictions have in fact gotten better. “The scope of expectation
around project development, the knowledge and understanding that exists
today, is way in advance of what it was in the last century, where a lot of
this data was taken from,” he said. “It would be really erroneous to imply
that no learning has taken place.”
‘FOOLS AND LIARS’
Where and how do project planners go wrong, as they supposedly have been
doing since the 1930s? According to the study, they make two main errors in
their predictions: they either succumb to over-optimism, which Flyvbjerg
says is a natural human tendency, or they deliberately and strategically
misrepresent their project in order to gain approval or funding.
There is “strong evidence that misplaced political incentives and agency
problems lead to flawed decision-making,” the report said. The dual problems
of “delusion” and “deception” often complement and exacerbate each other,
the report said.
In a press release issued by the authors, Flyvbjerg said that the two
categories of inaccurate predictors can be divided into “fools” and “liars.”
“Fools are the reckless optimists who see the future with rose-tinted
glasses,” he said. “These forecasting fools ignore hard facts and
uncertainty, betting the family silver on gambles with very low probability
of success. Liars deliberately mislead the public for private gain, fiscal
or political, by painting overly-positive prospects of an investment, just
to get it going.”
Taylor, of the dam industry, said that he found that implication
“incredibly offensive,” and cited the report as making a common mistake
about evaluating project planners’ estimations.
“In their data analysis, they’ve assumed that the construction engineers’
estimate for construction is the project cost. It’s not,” he said.
According to Taylor, the project cost includes consideration of all
associated programs, including social programs and environmental management.
“To look at the total cost of the project at the end of the process and
compare the difference is not comparing apples with apples,” he said.
SMALLER IS BETTER?
The Oxford report suggests that governments and companies look into
smaller, more flexible projects to replace the role of mega-dams in
supplying what Flyvbjerg called a “power-hungry world.”
He said that projects like those in Norway, which feature small dams or
turbines in tunnels, can be much more efficient and, importantly, deliver
needed energy much more quickly compared to mega-dam projects which can
take decades to complete.
Large dam projects also often lead to displacement of communities, and can
provoke protests, as has happened with indigenous communities in Brazil who
will lose some of their territory to the Belo Monte dam.
Taylor, however, said there is no direct correlation between the scale of
dam projects and sustainability, and said that a “concentrated, centralised
solution” is often the most efficient way to deliver energy.
In the year 2000, the World Commission on Dams released a comprehensive
350-page reportabout the role of dams around the world, highlighting
suggestions for creating more efficient hydropower projects. The damaging
report caused a long lull in mega-dam building. However, that trend has
turned around recently and construction has picked up again.
Flyvbjerg said that he hopes his team’s work can have the same effect as
the World Commission on Dams report did almost 15 years ago.
“We wanted to see, is there any new evidence that would actually justify
this re-emergence of the large number of large-scale dams being constructed
around the world? What we find is that there is no evidence to support
doing that. The evidence shows the exact opposite, just as we saw 20 years
ago,” he said.
“We do hope that things can change; we don’t take it as a given that
mega-dams have to continue, and we do hope that our study may help change
things for the better.”
Peter Bosshard, the policy director of a U.S.-based organization called
International Rivers, said that the report, which he referred to as the
“most thorough independent evaluation of large dams ever,” is a “damning
indictment” of the dam building sector.
“Even after following large dam projects for the past 20 years, I was
stunned by its findings,” he said.
“Their evaluation also refutes the frequent assertion that dam builders
have learned from past mistakes. Fortunately, renewable energy alternatives
are readily available, and governments are well advised to prioritise them
in their future energy strategies,” Bosshard added.
However, Taylor said that he believes final costs and even cost overruns do
not necessarily dictate the wisdom of a project. “It’s a risk that has to
be managed, and I believe that the sector is getting better at doing that,”
he said.
“The wisdom of the investment is to take the life cycle of that project,
and (look at), ‘Is that going to be putting society in a better place to
manage the future?’ Dams, and particularly hydropower projects, provide a
very … prudent way to manage our future, working with nature best as we can
to make sure that we can provide the vital services of energy and water.”
Samuel Mintz is an AlertNet Climate intern.
Received on Mon Mar 10 2014 - 20:01:24 EDT