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Big dams still bad news, says report

A report from the University of Oxford's Said Business School has come out punching against the construction of large dams.


A report from the University of Oxford’s Said Business School has come out punching against the construction of large dams.

Released March 10, 2014, the report is based on research of 245 large dams in 65 countries. It concludes that in the large majority of cases large dams are not economically viable, and “Instead of obtaining hoped-for riches, emerging economies risk drowning their fragile economies in debt owing to ill-advised construction of large dams.”

The study’s authors say theirs is the first systematic, global and independent research to be done since the World Commission on Dams published its findings in 2000.

They found that the construction costs of large dams is on average more than 90% higher than the budgeted cost at the time they were approved. This tendency to cost overruns has not declined in recent years.

The high costs were calculated even before any accounting for negative impacts on human society and the environment. Neither did they include the effects of inflation and debt servicing.

Researchers Professor Bent Flyvbjerg, Dr. Atif Ansar, Alexander Budzier and Daniel Lunn, published their research March 10 in Energy Policy.

In a press release, they note that countries like Brazil, China, Indonesia and Pakistan are building large dams today, running cost overruns similar to those of dams built in the 1970s. “For example,” they say, “Brazil’s Itaipu dam, built in the 1970s, suffered a +240% cost overrun that impaired the nation’s public finances for three decades. Despite producing much-needed electricity, Itaipu will likely never pay back the costs incurred to build it. Regardless, Brazil is currently building the controversial Belo Monte hydroelectric project, which has proved non-viable even before opening and awaits a fate like Itaipu’s.”

They also note that mega-dams take a long time to build — “8.2 years on average and often more than 10 years” — leaving them vulnerable to financial volatility and hyperinflation.

Professor Flyvbjerg did not spare his words: ‘Experts making forecasts about megaprojects can be usefully grouped into “fools” or “liars.”

Dr. Ansar said that emerging economies would be better focusing on smaller more flexible water resource projects: “‘If leaders of emerging economies are truly interested in the welfare of their citizens, they are better off laying grand visions of mega-dams aside. Proponents of mega-dams express concern that renewable water resources could be wasted if mega-dams are not built. Our research shows that as a general rule of thumb, many smaller, more flexible projects that can be built and go online quicker, and are more easily adapted to social and environmental concerns, are preferable to high-risk dinosaur projects like conventional mega-dams.”

To see the posting of the article in Energy Policy, click here.

http://www.sciencedirect.com/science/article/pii/S030142