Are Massive Hydropower Projects Worth A Dam?

After a two-decade lull, a brisk building boom of hydropower mega-dams is underway from China to Brazil. Lured by the promise of a nearly inexhaustible source of electricity, governments are spending billions of dollars. But a new study suggests that those countries are unlikely to see a return on their investment.

Massive dams have always been controversial, largely because of their impact on the environment and the people living in the vicinity. As the World Wildlife Fund (WWF) notes, dams block migratory fish species from their spawning and feeding sites and cause an accumulation of toxic materials by disrupting the transport of sediment along riverbeds. As such, the WWF estimates that during the 20th century wetland areas decreased in extent by 50% and more than 20% of the world's 10,000 freshwater fish species became extinct, threatened or endangered. Meanwhile, the World Commission on Dams says that 40-80 million people have been displaced by dam construction during the past 60 years, while others have lost access to food and clean water.

Yet governments defend the construction of large dams as modernization projects that will raise standards of living by providing a means for reducing fossil fuel consumption, controlling floods, expanding irrigation, increasing urban access to water and creating jobs. Plus, they acquire bonus points for show projects that give them international bragging rights.

But according to a study published by Oxford University researchers in the journal Energy Policy, mega-dams are not much to brag about. Based upon data on 245 large dams — built between 1934 and 2007 on five continents in 65 different countries — the researchers found that three out of four dams suffered a cost overrun, with construction budgets exceeding the original estimates by an average of 96%.

Are Massive Hydropower Projects Worth A Dam?

On top of that, eight out of every 10 large dams suffered a schedule overrun. The huge projects, on average, require 8.6 years to build, but frequent delays add 1.7 to 2.3 additional years for completion. Not only do these long time horizons make dam projects particularly ineffective in resolving urgent energy crises, it makes them especially vulnerable to currency volatility, hyperinflation, political tensions, swings in water availability and electricity prices.

Not one to mince words, Bent Flyvberg (a professor at Oxford's Saïd Business School and one of the authors of the study) says that, "The systematically poor outcomes of large dams suggest that fools and liars have been at the helm… Our research shows that as a general rule of thumb, many smaller, more flexible projects that can be built and go online quicker, and are more easily adapted to social and environmental concerns, are preferable to high-risk dinosaur projects like conventional mega-dams."

Read the study here: "Should we build more large dams? The actual costs of hydropower megaproject development" in the journal, Energy Policy.