OECD Governments Grant Export Subsidies for Dams: A Trojan Horse for Environmental Destruction, NGOs Say

International Rivers Network, Environmental Defense, FERN
Friday, September 2, 2005

On September 6–7, the OECD governments are expected to take a decision on whether to allow special financial terms to take effect for hydropower projects that are financed with official export credits. They are also expected to decide whether the current environmental guidelines of Export Credit Agencies are sufficient to mitigate the negative impacts of large hydro projects.

Non–governmental organizations have for many years advocated that Export Credit Agencies offer favorable financial terms for sustainable energy technologies like wind, solar, and geothermal. In April 2005, OECD governments agreed to do this but included hydropower in the proposal. Large dams are typically the most controversial and highest–impact infrastructure projects in Southern countries, and their inclusion undermines the credibility and intent of the original proposal.

Peter Bosshard, the Policy Director of International Rivers Network, says: "By extending special export subsidies to large dam projects, the OECD governments are turning a positive environmental initiative into a Trojan horse for environmental destruction."

NGOs today published a report which examines the social and environmental impacts of large dams that are being financed by Export Credit Agencies in China, Laos, Lesotho, the Philippines, and Turkey. The report finds that the record of dams financed with export credits is one of massive detrimental social and environmental impacts. The impacts include large–scale involuntary resettlement, human rights abuses, the destruction of critical habitats of endangered species, and significant contributions to climate change from methane emissions. The Nam Theun 2 Project in Laos, a project financed by four Export Credit Agencies and the World Bank, will for example emit almost twice as much greenhouse gases than would a gas–fired power plant generating the same amount of electricity.

Aaron Goldzimer, a social scientist with Environmental Defense, says: "If OECD governments want to show that Export Credit Agencies can do something good, the route is easy – drop large dams from the current proposal. Otherwise, they prove that despite years of talk about cleaning up their Export Credit Agencies, they really haven’t learned a thing."

The NGOs are proposing that export credit agencies should only finance dam projects that comply with the best–practice recommendations of the independent World Commission on Dams. Nicholas Hildyard of The Corner House comments: "Empirical evidence clearly suggests that the current environmental guidelines of Export Credit Agencies and the World Bank are not sufficient to mitigate the impacts or large dams."

Judith Neyer of the advocacy group FERN concludes: "The OECD governments should adopt the recommendations of the for all future dam projects supported with official export credits. They should not offer any further export subsidies for hydropower projects."

A Trojan Horse for Large Dams: How Export Credit Agencies Offer Subsidies for Destructive Projects Under the Guise of Environmental Protection, A Report Prepared for ECA Watch by The Corner House, Environmental Defense, FERN, Friends of the Earth–Japan, the Halifax Initiative, www.internationalrivers.org, Probe International, and the World Development Movement, September 2005, 27 pp., available at www.eca–watch.org.


Aaron Goldzimer, Environmental Defense, USA
Phone: +1 202–572–3395
Judith Neyer, FERN, Belgium
Phone: +32 2 742 2436