US Congress Sets Strict Limits on Global Dam Funding

Peter Bosshard
The World Bank-funded Sardar Sarovar Dam in India
The World Bank-funded Sardar Sarovar Dam in India
Wikimedia commons

Against all evidence of environmental destruction, widespread impoverishment and cost overruns, the World Bank is once again embracing mega-dams. In FY 2014, the Bank poured more than half of its power sector lending into large hydropower projects. The US Congress – still the biggest contributor to the Bank’s capital – has now sent a warning shot across the bow of international dam financiers.

In the budget bill for 2014, Congress asked the US Treasury to oppose any support for new large dams in international financial institutions (IFIs). Treasury interpreted these instructions only as guidance, and asked for clear criteria on which to assess dam projects. During the past year, the United States abstained from supporting the giant Inga 3 Dam in the World Bank’s Board of Directors, but supported other questionable projects such as the Dasu Dam in Pakistan.

In the budget bill for 2015, which was published today, Congress has now provided the large dams criteria that Treasury asked for. The criteria include key provisions such as the demonstrable public acceptance of projects, sound environmental impact assessments and environmental flows, expanded access to project documents, independent monitoring of project implementation, and the resolution of problems with existing dams before new projects can go ahead. In detail, the criteria (on p. 33 of an explanatory statement) read as follows:

1) Risk Assessment: Projects are selected based on resource and river basin management plans that include full stakeholder participation. These processes include a thorough, objective assessment of social and environmental impacts (including cumulative and life cycle gas emissions from sediment accumulation), and economic risks and returns;

2) Sustainability: Based on the comprehensive impact assessment described above, projects will safeguard river basin ecosystems, including by maintaining sufficient operational flows to protect existing ecosystems and critical natural habitats;

3) Citizens' Rights: Demonstrable public acceptance of projects, planned mitigation, and benefits are achieved through transparent, good faith engagement with full participation of affected people in the catchment, reservoir, and downstream areas. In addition, in recognition of communal ownership and usage rights of lands, territories, cultural and natural resources, decisions affecting indigenous people require meaningful informed participation during all phases of planning, implementation, and monitoring and good faith negotiations with affected indigenous people communities, including individuals and their representative bodies and organizations. Affected people have access to grievance mechanisms at the project and IFI level or through the borrowing country government;

4) Public Oversight: The project has been developed transparently, with timely public access to key documents including environmental and social impact assessments and management plans, feasibility studies, economic and risk analyses, and revenue management plans, with appropriate exceptions for proprietary information;

5) Management: The country has in place sound dam management practices, or, where necessary, commits to appropriate and timely capacity building. Outstanding operational problems with existing dams in the country in the same river basin are being addressed before investments in new dams;
6) Independent Monitoring: The project includes environmental and social mitigation measures to be funded and implemented throughout the life of the project based on a monitoring and mitigation plan. Progress on these mitigation measures is regularly monitored and publicly reported.

Announcing the Chixoy Dam reparations agreement
Announcing the Chixoy Dam reparations agreement
Photo courtesy of

The Congressional criteria reflect the lessons of past experience with large dams. If taken seriously, they will stop the worst projects from going forward, and can improve the projects that still get built. The burden of proof is now on the World Bank and other financiers to show that they can indeed develop large dams under such best-practice guidelines. If they cannot, energy solutions without massive social and environmental impacts have become widely available.

The new budget bill includes further provisions which, for example, oppose aid funding for forced resettlement projects in Ethiopia and support strong social and environmental safeguards at the World Bank. It specifically instructs Treasury to oppose any future World Bank projects if the Bank goes forward with its plan to massively weaken its current safeguard policies.

I am personally not comfortable with a multilateral system in which voting rights are based on financial contributions. Yet I very much appreciate it when the biggest contributor takes its social and environmental responsibility seriously, and salute Senator Leahy from Vermont and other Congressional leaders who have consistently advocated for environmental protections and poor people’s rights.

In the budget bill for 2014, the US Congress supported reparations for the survivors of the horrendous massacres during the construction of the World Bank’s Chixoy Dam in Guatemala. In a historic breakthrough, the country’s President one month ago offered more than $150 million in compensation, development assistance and environmental restoration to the communities that were affected by the project. Let us hope the new provisions will help bring about a similar breakthrough in the way dams are built.

Wednesday, December 10, 2014