(March 27, 2012) Pressure over climate change and the potential for profit are behind a dam-building boom in China that, without public oversight, is running roughshod over the country’s environment and the livelihood of its people. Property rights must be respected, says the author of a new report.

by Patricia Adams, Probe International

Pressure to reduce carbon emissions is pushing China to expand its hydropower capacity at the expense of the environment, without accountability to the public, says a new investigative report by the Beijing-based independent think-tank, Transition Institute.

Focused on Sichuan province in China’s western region, the report compiled by energy researcher, Liu Zhi, on China’s breakneck pace of dam construction, found an industry fuelled by state subsidies, lacking in public oversight.

State-owned banks fund state-owned hydro companies to build dams that sell power to the state grid at prices set by fiat by the state. The profits generated, and tax revenues collected, benefit local governments, which, in one county’s case, accounted for 75% of the tax base.

The problem, says Mr. Liu, is that “all of this activity takes a toll on the environment.” Wastes pile up, land is flooded upstream, while downstream areas are deprived of water so that “fish stocks have diminished severely,” he reports.

“There is no effective supervision, so there is almost no water in the downstream river reaches below dams,” says Mr. Liu.

The economics of these dam projects is doubly suspect because the environmental and social costs of robbing people of their livelihoods and food sources are not taken into account by state dam builders.

The migrants displaced by dam construction, interviewed by Mr. Liu, said they were not duly compensated for their houses and farms when they were forced to move for the construction of dam reservoirs. They said they had also experienced difficulty earning a living in the areas they were relocated to. It should be noted that relocation for dams, and other projects involving property seizures by state-sanctioned bodies, have become flash points for China’s 100,000-plus public uprisings each year.

Expecting governments to stop creating this harm is futile, says Mr. Liu, because governments – as developers, tax collectors, and environmental regulators – have a conflict of interest. Moreover, it would be impossible for journalists and environmentalists to become monitors of these projects because of the sheer volume and poor disclosure of their details.

“The only solution to the irrational and uneconomic exploitation of Sichuan’s water resources,” says Mr. Liu, “is for local people and organizations to exercise public oversight over the use of their natural resources.”

To do that, he says, the property rights of those affected by dams must be respected, forcing developers to pay for the harm they create or abandon their projects if the projects become unprofitable.

Only then, says Mr. Liu, will China’s power sector investments become economically sound and will social unrest subside.

Read Liu Zhi’s full report, here.

The Transition Institute, founded in March 2007, researches issues related to freedom and justice during China’s transition period, including tax reform, business regulation and reform, citizen involvement and civil society rights.

For more information on how dams are drying China’s mightiest river, the Yangtze, see Fan Xiao’s report, A Mighty River Runs Dry.

For more background information on how China has used concern over global warming to finance its hydro industry, see this report by International Rivers. According to International Rivers, of the 2,194 hydro projects that are seeking or have already been financed by the sale of UN-sponsored carbon credits, 1,348 of them are in China. This financing has helped to make China the world’s largest hydroelectric producer and the largest beneficiary of climate-change financing. This also helps explains why China held out at the 2011 UN climate change conference in Durban for a renewal of the Kyoto Protocol.

See this report by Human Rights Watch on the number of “mass incidents” that occur in China every year.