Foreign Aid

Back to the future for the World Bank and hydropower

(July 19, 2013) The World Bank is once again getting back into the risky business of building large-scale dams. 

By Brady Yauch for Probe International

The World Bank is renewing its focus on large-scale dams, a sector it largely abandoned in the 1990s and early part of last the decade after suffering years of criticism concerning the environmental and social blowback of such projects.

The Bank’s excuse for returning to the dam business – a sector in which it helped finance numerous white elephant projects across the developing world – is a combination of a desire to fight climate change and support economic development.

It’s also in stark contrast to the highly publicized 2000 report of the Bank-created World Commission on Dams (WCD) titled Dams And Development: A New Framework for Decision-Making, which said in too many cases large dams carried an “unacceptable and often unnecessary price.”

“The knowledge base indicates that shortfalls in technical, financial and economic performance have occurred and are compounded by significant social and environmental impacts, the costs of which are often disproportionately borne by poor people, indigenous peoples and other vulnerable groups,” the WCD said in the report. It also argued that a “considerable portion” of large dams failed to deliver the promised amount of water and electricity.

Many large-scale dams also failed to meet their economic targets, the report added.

But the Bank is now singing a different tune. Speaking to the Washington Post, Rachel Kyte, the Bank’s vice president for sustainable development, says hydro power has a key role to play in its drive to promote economic development and environmental protection in the developing world.

“Large hydro is a very big part of the solution for Africa and South Asia and Southeast Asia…I fundamentally believe we have to be involved,” Kyte says, adding that the earlier move out of hydropower “was the wrong message … That was then. This is now. We are back.”

The Bank is not simply eyeing small-scale sustainable projects: it has much grander ambitions.

“The World Bank supports the development of the next generation of large-scale, transformational regional generation projects,” it said in a recent report. “Transformational projects are those that imply major positive improvements to some binding constraint and are ultimately capable of effecting a fundamental change in a country.” (my italics)

Africa is likely to factor largely in the World Bank’s new drive towards building large-scale dams. The Bank estimates that as much as 93 percent of Africa’s “economically feasible” hydropower remains untapped and that as much as 30 gigawatts (GW) of hydropower could be developed in Sub-Saharan Africa over the next decade.

The Bank is already involved in the controversial $12-billion Inga 3 dam in the Democratic Republic of Congo and may try to move forward on the even more controversial Grand Inga Dam. The Bank has already committed about $50 million to the 4,800 megawatts (MW) Inga 3 project, according to information on its website.

And that’s just the tip of the iceberg. Three major development banks – the World Bank, the Asian Development Bank, and the European Bank for Reconstruction and Development – increased their funding by fivefold for the hydropower sector between 2003 and 2012, according to Bloomberg BNA. The World Bank spent nearly $1.8 billion on dam projects in 2011 and another $955 million in 2012, the report added.

Ominously, the Bank’s last foray into hydropower in the DRC was a disaster. The Inga 1 and 2 dams, built in the 1970s, are currently in major disrepair, and operate at about 50% of full capacity. They have proven to be costly white elephants for the impoverished country, while those most affected by them did not receive compensation.

Furthermore, half of the power from Inga 3 is expected to light up South Africa with another large chunk going to mining companies and so, in the process, bypass the poor of the DRC.

The World Bank left the dam business for good reason: it was bad business. Adding a dubious new justification to build dams – lowering carbon emissions – doesn’t change the simple fact that large scale dams are an economic drain on countries that can least afford them and the long-term environmental impacts are often, as the Bank itself admitted, large and unaccounted for.


3 replies »

  1. Africa is a basket case thanks mainly to groups like the World Bank……..the U.N. and World Bank won’t get out of Africa and let the people develop their own resources……………yet once again these oligarchs claim they are making Africa “sustainable and economically successful”……………these must be “buzz-words” for “impoverishment and slavery”!

  2. Big dams often cause controversy due to the widespread impact on local communities, flood areas, changes in river ecosystems, geologic hazards, and regional water are five of the world’s most controversial dam projects, either recently completed or still under construction.

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