The World Bank is Bringing Back Big, Bad Dams

Peter Bosshard
Tuesday, July 16, 2013

Originally published in The Guardian, Environment Blog

Kariba Dam on the Zambezi River
Kariba Dam on the Zambezi River
By Alamy

The big, bad dams of past decades are back in style.

In the 1950s and '60s, huge hydropower projects such as the Kariba, Akosombo and Inga dams were supposed to modernise poor African countries almost overnight. It didn't work out this way. As the independent World Commission on Dams found, such big, complex schemes cost far more but produce less energy than expected. Their primary beneficiaries are mining companies and aluminium smelters, while Africa's poor have been left high and dry.

The Inga 1 and 2 dams on the Congo River are a case in point. After donors have spent billions of dollars on them, 85% of the electricity in the Democratic Republic of Congo is used by high-voltage consumers but less than 10% of the population has access to electricity. The communities displaced by the Inga and Kariba dams continue to fight for their compensation and economic rehabilitation after 50 years. Instead of offering a shortcut to prosperity, such projects have become an albatross on Africa's development. Large dams have also helped turn freshwater into the ecosystem most affected by species extinction.

Under public pressure, the World Bank and other financiers largely withdrew from funding large dams in the mid-1990s. For nearly 20 years, the bank has supported mid-sized dams and rehabilitated existing hydropower projects instead.

Following a trend set by new financiers from China and Brazil, the World Bank now wants to return to supporting mega-dams that aim to transform whole regions. In March, it argued that such projects could "catalyse very large-scale benefits to improve access to infrastructure services" and combat climate change at the same time. Its board of directors will discuss the return to mega-dams as part of a new energy strategy on Tuesday.

The World Bank has identified the $12bn (£8bn) Inga 3 Dam on the Congo River - the most expensive hydropower project ever proposed in Africa - and two other multi-billion dollar schemes on the Zambezi River as illustrative examples of its new approach. All three projects would primarily generate electricity for the mining companies and middle-class consumers of Southern Africa.

The World Bank ignores that better solutions are readily available. In the past 10 years, governments and private investors installed more new wind power than hydropower capacity. Last year, even solar power - long decried as a Mickey Mouse technology by the dam industry - caught up with new hydropower investment. Wind and solar power are not only climate friendly, they are also more effective than big dams in reaching the rural poor in sub-Saharan Africa, most of whom are not connected to the electric grid.

The International Energy Agency recommends that more than 60% of the funds required to bring about universal access to electricity be invested in distributed renewable energy projects such as wind, solar and small hydropower plants. Yet so far, funding for bringing these promising technologies to Africa has been woefully lacking. Like other donors, the World Bank is behind the curve on this. In 2007-12, it spent $5.4bn on hydropower, but only $2bn on wind and solar projects combined. A renewed focus on mega-dams would make matters worse.

Is the World Bank blinded by an outdated ideology? More likely, its return to mega-dams is driven by institutional self-interest. A strategy paper leaked from the bank in 2011 recognised that the increase in project size "may seem somewhat at odds with the goal of scaling up activities in areas where many potential projects - such as solar, wind and micro-hydropower ... tend to be small". Yet, the paper argued, the "ratio of preparation and supervision costs to total project size" is bigger for small projects than large, centralised schemes, and so bank managers are "disincentivised" from undertaking small projects.

The World Bank, in other words, still finds it easier to spend billions of dollars on mega-projects than to support the small, decentralized projects that are most effective at expanding energy access in rural areas. It appears to be caught in the development model of past decades. If internal constraints prevent the bank from doing what is best for the poor, governments should find other vehicles for reducing energy poverty and combating climate change.

PS: On July 16, 2013, the World Bank adopted its new Energy Sector Directions Paper.