Large dams built in the twentieth century showed propensity for cost overruns, schedule slippage, underperformance, mission creep, and uneven development. The planned benefits proved difficult to deliver as projects outcomes were influenced by unpredictable and uncontrollable factors. By the nineties increasing awareness of the social and environment costs slowed down large dam development.
In the new millennium hydropower development has been reframed as renewable, low carbon, green energy, and as such a climate change mitigation strategy. Rising energy demands in especially developing countries and emerging markets are presented to justify potential negative impacts, which are to be minimized through compensation and mitigation processes. Furthermore, hydropower development is considered to generate a good financial return on investment, enough to justify substantial public investment as well as attract private capital.
Because of their long temporal and spatial shadow and profound impact on people and patterns of development, this current renewed enthusiasm for building large dams urgently demands closer scrutiny. Using case studies we examine to what extend the presented objectives and justifications are materialized and their impacts. Hydropower development has been promoted by the World Bank as a high risk high reward strategy; in this paper we examine who bears the risks and who benefits from the rewards?
Based on case studies, analysis of policy documents, dam projects documentation (contracts such as concessions, power purchase agreements) and strategic reports from different financial stakeholders (multilaterals, commercial banks, investors), combined with scientific literature, we aim at documenting genuine driving interests of different advocates of large dams and the repercussions of related risks. Using recent insights from the political ecology and financialisation literature, we analyze hydropower programs in three regions: the Mekong, the Himalaya and Western Africa.
Results and Discussion
Private actors play an increasingly prominent role and traditional sources of funding such as the International Financial Institutions have taken on a more facilitatory responsibility. This has been made possible with the deregulation of the energy sector alongside liberalization of the finance sector.
n this context, dam development involves the creation of new financial opportunities and products that are attractive to regional and global commercial financial actors. We conclude that the commercial banks and private investors are more concerned with returns on their investment than societal or developmental goals. Thus financiers are disconnected from energy production. Public agencies at the local, national, regional and global level have taken on different responsibilities but have lost influence on the processes of construction and operation decision-making, affecting their sovereignty over management of natural resources.
We show that hydropower development is increasingly attractive as an investment opportunity. By applying financial instruments which are normal procedure in the financial world yet rather new for the hydropower sector, the new players have fundamentally changed the game of large dam building. They have transformed hydropower development into obscure, secretive and complex financial constructions and have capital considerations influencing national energy policies in liberalized power markets. Private interests are now more decisive for decisions on hydropower construction than public development objectives. Given the enormous impact of dams and their long spatial and temporal shadows this can have long-term consequences which are difficult to foresee. Yet it does raise pertinent questions concerning development trajectories and (democratic) processes of governance, particularly where emerging regional and global financial actors have divergent temporal interests than national governments.