New Directions in Hydropower?

World Bank President Zoellick with a Friend
World Bank President Zoellick with a Friend
World Bank

A new report entitled, Directions in Hydropower, summarizes the World Bank’s current approach to hydropower projects. The report says that the Bank will scale up its support for hydropower, and claims that it will respect the triple bottom line of social, environmental and economic sustainability in doing so. If we look at the World Bank’s report and practice in more detail, the social and environmental bottom lines still mainly seem to be meant for public consumption.

After a period of increased caution, the World Bank in 2003 began promoting and financing high-risk dam projects again. Since then, the Bank Group has approved $3.7 billion in support for 67 hydropower projects. Annual approvals increased from zero in 1999 to approximately $200 million in 2003 and more than $1 billion in 2008. Recent projects include Bujagali in Uganda, Bumbuna in Sierra Leone, Felou in Senegal, Nam Theun 2 in Laos, and Rampur in India.

The new report recognizes the impacts and risks of hydropower projects, including issues that the Bank has tried to ignore for a long time, such as reservoir emissions and the unreliability of hydrological data under climate change. In its lending portfolio, the Bank has tried to stay out of serous trouble by supporting projects with relatively small reservoirs. It has also funded the rehabilitation of several existing projects, including in the DRC, Georgia, Macedonia, and Ukraine. Nam Theun 2 is the only new project that displaces a large number of people, and impacts many more in downstream communities.

The Bank has additional projects for about $2 billion in its pipeline, including dams in India, Vietnam, Rwanda, Ethiopia, Guinea, Brazil, Romania, Turkey, Georgia and Tajikistan. It also wants to support more pre-feasibility studies to promote the preparation of further projects.

Although the World Bank has avoided funding destructive mega-projects, its approach to hydropower is still questionable in many ways:

Woman and baby affected by Nam Theun 2 Dam
Woman and baby affected by Nam Theun 2 Dam
Virginia Morris & Clive Hills

  • Even though the Bank has carried out a lot of studies and devoted much rhetoric effort to the sustainability of hydropower projects, it has cut a lot of corners in addressing the social, environmental and economic risks of the dams it funds. In the Nam Theun 2 Project for example, legal agreements have been violated and social and environmental commitments have been broken. The people displaced by the reservoir have received better houses, but the more than 120,000 people affected by the project still don’t know how they are supposed to feed their families. Similarly, the Bank treated displacement mainly as a matter of compensation in Uganda’s Bujagali Dam, and did not ensure that affected people can restore their long-term livelihoods.
  • In addition to financing new projects, the Bank plans to “strengthen the sectoral foundations” of hydropower through efforts such as “expanded policy development, cross-sectoral planning, capacity building, and the mobilization of funds”. We have often found that the Bank strongly promotes dam building when it should give unbiased advice. Bank cheerleaders have dismissed the findings of the World Commission on Dams and the risks of large dams at many industry meetings. In Brazil, the Bank has lobbied for the weakening of the environmental licensing process for dams in the Amazon, and criticized the efforts of public-interest attorneys to ensure that dams comply with existing laws and regulations. In the Infrastructure Consortium for Africa, the Bank is pushing for massive export-oriented hydropower projects in countries such as Ethiopia - without assessing the continent's energy options transparently, and without integrating the environmental costs and hydrological risks of such ventures.Like previous publications, the new report claims that 70% of the economically feasible hydro potential in developing countries – and 93% of the potential in Africa – remains unexploited. The World Bank thus touts a propaganda line of the dam industry and ignores the negative social and economic experience of countries such as Zambia, Zimbabwe and Ghana, which have exploited much of their existing hydropower potential. If the Bank indeed considered the carrying capacity of ecosystems and societies a bottom line of dam building, its estimates for the unexploited potential of hydropower would be much lower.
  • A fisherman deplores the legacy of dams on the Indus River
    A fisherman deplores the legacy of dams on the Indus River
  • The new report indicates that the World Bank has learned the “lessons from the past”. Yet the Bank does not accept responsibility for past errors, and does nothing to address the social and environmental legacy of its existing dam projects. This legacy includes the displacement of at least 10 million people, lost livelihoods, damaged ecosystems, massive debt burdens and, in some cases, serious human rights violations. Coastal communities in Pakistan are still waiting for compensation of the damages caused by a World Bank drainage project that ignored all their warnings. The Tonga people in Zambia are still impoverished 50 years after they were forced off their lands by the Kariba Dam. Guatemalan farmers are still seeking justice for the murder of hundreds of family members who stood in the way of the Chixoy Dam. Addressing the social and environmental legacy of existing dams is as important as their technical rehabilitation.
  • In 2008, the World Bank approved just over $1 billion for hydropower projects. This is not more than the long-term average of an institution which has approved close to $100 billion (in 2007 dollars) for dams in its history. Even so, funding for hydropower is crowding out support for renewable energy alternatives. Support for technologies such as wind, solar, biomass and small hydro amounted to only $476 million in 2008. If support from the Global Environment Facility and carbon credits is not included, the Bank spent a meager $280 million on renewable technologies in 2008. This is less than the year before. If the Bank indeed adopted a triple bottom line approach to the energy sector, it would support more renewable and fewer hydropower projects.

Peter Bosshard is the policy director of International Rivers. His blog, Wet, Wild and Wonky, appears at