Lori Pottinger
World Rivers Review
July 15, 1999

On June 4 the World Bank approved a loan for Mohale Dam, the second of five large dams in the Lesotho Highlands Water Project (LHWP).

While the project’s first dam, the 182-meter-high Katse Dam, has been controversial for the unresolved social and environmental problems it has left in its wake, the 145-meter Mohale Dam has raised an uproar over whether or not it is even needed. The $8 billion LHWP – the largest infrastructure project under construction in Africa – will transport Lesotho’s water to South Africa’s industrial Gauteng province. Bank documents reveal that Mohale’s water is not required until the year 2010 (and perhaps not until 2018), time enough to pursue better solutions to South Africa’s growing water-management crisis.

Water conservation experts contend that building the dam now will send the wrong message to South Africans just beginning to grapple with the need for increased conservation and better water planning. But Bank staff contend that it is less costly to build the $1.1 billion Mohale now, even if its water is not needed for years. George Constantinides, the demand manager for Rand Water, South Africa’s largest water supplier, stated in March that conservation measures could reduce demand by 40 percent and thereby delay the Mohale “by years.” Spending 1 billion Rand on retrofitting less efficient appliances and fixing leaky pipes, Constantinides says, would save R3 billion Rand in consumption (1 Rand US$.20).

Guy Preston, head of the water conservation program for South Africa’s Department of Water Affairs and Forestry, said, “We can get significant savings from delaying schemes. We can put that money into other, more important social things.” Preston said delaying Mohale Dam would mean a “conservative” R800m savings per year, including operating costs. Topping the list of urgent social spending needs is increasing the number of South Africans with access to water. Currently, millions of South Africans are without a reliable, safe water supply, and those that are connected to the water supply have inferior, wasteful systems built in the days of apartheid.

The following statistics help illustrate the scope of the problem:

* In 1995, an estimated 18 percent of the nation’s urban population had no adequate water supply.

* Up to 50 percent of the township of Soweto’s water is lost through poor-quality infrastructure.

* To supply Gauteng’s waterless poor would require just 5 percent of the water used by middle income South Africans on gardens.

The biggest obstacle to solving this problem, then, is not finding more water, but finding the money to pay for the infrastructure. Without a touch of irony, a World Bank project appraisal report states that “the LHWP is one of the very few successfully implemented projects in the world aimed at regional water management.”

But water planners in the region see it as the wrong approach at the wrong time. Steve Rothert, a water resources specialist working in Botswana for International Rivers Network, says, “By supporting a project that is not needed for many years, the Bank is sending a message that it supports supply-driven water-resources management, even in one of the most arid regions in the world.”

Building the project prematurely could also negatively impact water conservation efforts by altering the financial picture for Rand Water. To pay its portion of the project’s capital costs, Rand Water could be forced to sell more water, not less, thus undermining its efforts to put into place ever-stricter demand-management measures.

Such measures include a range of practices, including installing water-conserving toilets and shower heads, incrementally increasing costs to penalize higher levels of consumption and implementing policies to reduce waste by the biggest consumers like large-scale agriculture (which accounts for 50% of South Africa’s water use). The LHWP’s costly dams means higher-priced water for South African consumers, a burden which hits poor township dwellers the hardest. In the past year, the price of water for Rand Water consumers almost doubled because of capital investments, primarily to pay for the LHWP.

Inspection Panel Claim

The World Bank has policies that mandate the examination of alternatives to projects such as this. For example, its policy on dams states, “Design of investment programs for supplying water or energy should consider demand management as well as supply options.” But internal project documents imply such policies have been set aside in planning the LHWP. The April 30, 1998 Project Appraisal Document states: “As important as demand side management in the water sector is there is no specific reference in the project to such measures, nor is there a legal requirement in the loan for RSA to implement such policies, since this is a loan to [Lesotho-based project authorities] LHDA.”

In light of these policies and the possibility that the project is being built prematurely, in April some residents of Alexandra township filed a claim with the World Bank Inspection Panel, the independent body charged with investigating claims of Bank policy violations brought forth by project-affected people.

The Inspection Panel’s official notice of the claim states, “The Requesters allege that the Bank failed to consider demand management alternatives to phase 1B. Therefore they maintain that the project should be delayed at least until detailed demand management studies due in late 1999 have been completed. If the project is not delayed the Requesters claim they and other poor communities are likely to have to pay higher prices for water than otherwise; that those poor communities without water will still not get access to water; and, that financing for badly needed infrastructure repairs will be squeezed out resulting in shortages and lack of conservation in existing water delivery to the poor.”

At press time, the Inspection Panel had just begun its preliminary investigation of the claim. Meanwhile, Lesotho NGOs monitoring the project’s social problems have recently backed down from efforts to delay the next dam, in part due to political pressure, which has intensified over the past year. In addition, project authorities have made sweeping claims that they have learned how to avoid the many social problems caused by the first dam, although many of these problems remain unresolved.

Dam or Poverty Project?

The Bank publicly justifies the project as the best way to help Lesotho develop its way out of poverty. Perennially ranked by the United Nations among the world’s poorest countries, Lesotho has a 50 percent unemployment rate and almost no natural resources that can be turned into cash–except water. The Bank’s view of the project as a poverty- buster has been prophetic, and Lesotho is becoming increasingly dependent on royalties from the LHWP, which brings in some US$40 million a year. “If you delay the project even by one year… it’ll knock six percent off Lesotho’s GDP (gross domestic product) this year,” said John Roome, the LHWP project manager for the Bank.

Korinna Horta, an environmental economist with the US-based Environmental Defense Fund, says, “The LHWP is likely to overwhelm Lesotho and determine its political economy for generations to come. The sheer size of the project diverts attention from any other possible development programs for Lesotho.”

Income-restoration for the thousands of people affected by the first dam has been ponderously slow. In the beginning, the project emphasized training in vocational skills that were virtually unneeded in Lesotho. The program has since shifted to small-enterprise development skills. But with Lesotho’s high unemployment and low per-capita income, the goal of creating a new entrepreneurial class from the farmers displaced by the project seems highly unlikely. The Bank-sponsored panel of environmental experts itself remains pessimistic about the restoration of incomes, as do some project employees (at least one employee privately stated that the likelihood that the project would result in the successful creation of alternative livelihoods for affected people was “virtually nil”). It may be possible to create more effective training programs and devote more time and funding to job creation, but it is not clear that such measures will be enough – even within the generous 15-year time span set by the Bank.

For more information visit IRN’s web site: http://www.irn.org.