S American Dams Cost More Than They're Worth

by Gustavo Gonzalez

The report states that while large dams contribute significantly to human development, they also have "in too many cases an unacceptable and often unnecessary" social and environmental price.

The document, "Dams and Development: A New Framework for Decision-Making," was released by former South African president Nelson Mandela and WCD Chairman Kader Asmal. The WCD an independent body comprised of affected communities in developing countries as well as dam builders and governments.

Some 45,000 large dams have been built worldwide as part of hydroelectric, irrigation, water storage and flood control projects, or to create artificial lakes with tourism in mind.

The report states that South America is a "cornerstone" in the work of the WCD, given the controversies that have broken out in the region in recent years over the construction of large dams, generally financed by the IDB, or by the World Bank -- the agency that along with the World Conservation Union (IUCN) originally set up the commission on dams.

South America has more than 1,000 dams categorized as large -- with walls more than 15 meters high -- including 594 in Brazil, 101 in Argentina and 88 in Chile, according to the WCD.

The report includes a detailed study on the case of the Tucurui dam in Brazil, which covers 70 percent of energy demand in the northern part of the country. The dam's capacity is to be doubled in the second phase of the project, set to be completed in 2006 with a total investment of $10 billion.

The Tucurui dam is perhaps the most controversial of any in Latin America -- a region that has seen a number of loud controversies over ambitious hydroelectric projects like Yacyreta on the border between Argentina and Paraguay, Urra in Colombia, El Cuchillo in Mexico, Bayano in Panama and Pangue and Ralco in Chile.

In the following two decades, financing for such works was cut substantially by the World Bank, the IDB and other lending agencies, while the participation of the international private banking system grew.

The Endesa consortium in Chile paid off a World Bank loan early in 1997, after the lending agency made a critical assessment of the company's compliance with the environmental and social commitments it assumed in the construction of the Pangue hydroelectric plant, which displaced Pehuenche indigenous communities.

Endesa paid off its IDB loans with credit from German bankers, and contracted additional private sector loans to build the Ralco dam, which like Pangue is threatening Pehuenche families living along the Buobio river in the Andes mountains some 500 kms south of Santiago.

"It is very significant that the WCD report condemns the forced resettlement of communities by the construction of dams. That should never occur again," environmentalist Juan Pablo Orrego, president of the Buobio Action Group (GABB), told IPS.

GABB, an umbrella of environmental, labor, indigenous and other social groups, is waging a campaign against the construction of the Ralco dam to defend 80 Pehuenche families who will be displaced, and to protect a unique Andean river ecosystem.

Yacyreta, meanwhile, will displace some 50,000 people, who will lose their homes, businesses and livelihoods.

The demographic and environmental impacts of large dams are also exemplified by the WCD's study on the Tucurui dam.

The report warns that the added costs of the mega-project generated by the subsidies offered to large industrial consumers of electricity in Brazil could in the end drive up the price of what was touted as the most economic energy option.

Moreover, the Tucurui dam will generate as large a volume of greenhouse gasses as the electricity generated by petroleum and other fossil fuels that it sought to replace, the WCD notes.

Although dams offer apparent fishing benefits in the reservoirs that are created, the fishing losses caused downstream outweigh those benefits, adds the report.

The Tucurui dam has also had a major negative impact on human health. The incidence of malaria rose during construction, the reservoir has become a permanent breeding-ground for mosquitoes, and the river that forms the artificial lake has introduced mercury used by gold-prospectors into the food-chain.

Tucurui is another typical case of the difficulty of applying established financial concepts to projects that not only involve construction costs and energy benefits, but social and environmental impacts as well, states the commission.

But the Brazilian dam also offered new guidelines for addressing such challenges, through open consultations between electric companies, affected communities and environmental agencies, as occurred in a January meeting in the northern Brazilian city of Belem, the document underlines.

The disputes of the past should be transformed into transparent agreements in the future, says the WCD, which called for participative consultations among all parties implicated in the problems and benefits generated by large dams.