AFTER three years of turmoil and against still bitter opposition in some quarters, large hydro power is back in favour within the global development community. This is the clear message from the third World Water Forum (WF3) held in Kyoto, Japan, 16-23 March.

But this does not mean ‘business as usual’. Instead, greater financial flows for large hydro power projects in developing countries that are expected to be approved in principle at the upcoming G8 summit in Evian, France, in June, will be conditional on significant albeit flexible compliance with much more rigorous criteria.

These are expected to include much more objective project justification vis-à-vis other options, much greater openness with affected communities from the earliest project planning stages, much greater attention to environmental issues, and more rigorous project implementation and operational requirements. New Japan Bank for International Cooperation (JBIC) guidelines (IWP&DC February 2003 pp14-15) are a good example of what to expect.

The event that contributed most to hydro power’s rehabilitation was the September 2002 Johannesburg World Summit on Sustainable Development with its emphasis on poverty eradication. This focused the water industry’s minds on the implications of the UN Millennium Development Goals declared in 2000. These call, as proof that the incidence of global poverty has been halved by 2015, for similar reductions in the number of people without access to safe drinking water and sanitation facilities worldwide.

A far cry from large dams, one might think. But energy is acknowledged to be as important as water to poverty eradication, and the World Water Council (WWC) has shown that energy and water are closely inter-related in many more ways than just hydro power. Therefore, in order to achieve the water goals, similar power goals must also be achieved. In macro-economic terms according to the World Bank, ‘low income countries need to grow at per capita rates of 3.6% per year if the 29% of the world’s population living on less than US$1 per day in 1990 is to be halved by 2015’.

Many different strands support new hydro within this general perception. Most obviously, if more water storage and energy will be required, it makes clear sense to equip all dams with whatever power generation capacity will be economic.

In this connection, Chapter 8 on ‘Water for energy’ of the WWC report that was discussed at WF3 says that ‘only about 20% of the world’s large dams are dedicated to electricity production, leaving a huge window of opportunity to add more hydro capacity to existing dams. In the US alone, about 20,000MW of new capacity could be gained by adding generating units to about 2500 existing dams’.

Additional storage capacity will also be needed to maintain existing water supply security in developing countries within the context of increasing climate variability due to climate change. ‘Many poor countries,’ observed the World Bank late February when it announced its new Water Resources Strategy (WRS), ‘have as little as 1% of the water infrastructure capacity of rich countries’ even as they face the same growing risks.

WWC data at WF3 moderate this statement somewhat – Laos and Thailand both have about 20% of US per capita storage capacity while China has 40%. However, Ethiopia meets the claimed 1% level and even South Africa has only around 13% of US storage.

A further argument for renewed attention to hydro power was that the existing fleet of dams is aging. ‘However carefully current infrastructure is managed,’ claimed the WWC report, ‘every year a portion of it will grow too old and have to be replaced. For example, although 200 dams are built each year, this is not enough to maintain the capacity’ of the 45,000 major dams worldwide.

Finally, the WWC also came to hydro’s environmental defence. ‘Although there has been debate about the greenhouse gas emissions from large hydro power schemes’, the report noted, ‘there is little doubt that greater reliance on new renewable energy sources and large hydro power would slow climate change. Moreover, it will not be possible to meet the energy needs of the developing world without storing water to produce energy.’

Such rehabilitation of large hydro has prompted sheer outrage among its critics. Most prominently, as soon as it became clear that the World Bank’s revised WRS would align itself with these arguments, International Rivers Network (IRN) campaigns director Patrick McCully charged that the new strategy was ‘reactionary, dishonest and cynical’.

Speaking from the perspective established by the World Commission on Dams (WCD) November 2000 report, Dams and Development, McCully claimed that because the ‘WRS promotes the megadam-based strategies of the second half of the 20th Century, the World Bank is seeking to turn back the clock on water management’.

He supported his charge of dishonesty by noting that in November 2000 ‘Bank management told the Commissioners that the WRS would be the main vehicle in which the Bank would address [the Commission’s] findings and recommendations’. Yet the WRS in fact ‘ignores’ many such findings. In the few cases where they are mentioned they are ‘seriously distorted’, McCully charged.

McCully also disputed that the Johannesburg Summit in any way authorised renewed support for hydro power.

Such hard-line criticism is however becoming increasingly difficult to substantiate and is therefore losing support. The most obvious instance of this came at WF3 in a document jointly produced by IRN and Friends of the Earth (FoE) Japan entitled Dammed Rivers, Damned Lies. It sought to counter the WWC arguments outlined above but, according to some critics, it in fact said very little new and may even have unintentionally supported the WWC.

Thus with reference to hydro power’s greenhouse gas emissions, after properly distinguishing between gross and net reservoir emissions and drawing attention to ‘massive methane emissions’ measured from water being discharged from the Petit Saut dam in French Guyana, the IRN/FoE Japan document presented the table above right. It was not sourced apart from a general reference to ‘Canadian researchers’ but in any case appears largely to support the WWC contention that ‘large hydro power would slow climate change’.

This chimed neatly with a series of statements at the Forum in favour of a measured return to large hydro. Thus Egyptian minister of water resources and irrigation Dr Abu Zeid told participants, ‘More storage will be needed…but we must take great care for the environment and cultural heritage. Even more important, we have to make sure that those people affected by the development of dams will be better off than before the dams were built’.

World Bank vice president for sustainable development Ian Johnson similarly urged pragmatism in order to ‘take action that suits the circumstances of each country. The time has come to move beyond the ideological frontier and look at mixed solutions involving all key stakeholders. We know there is no universal prescription.’

Perhaps most tellingly, Ger Bergkamp, speaking for the IUCN that together with the World Bank sponsored the WCD said: ‘Parties need to accept disagreement and give room to the real stakeholders for discussion and negotiations. Nobody disagrees any more with respecting existing rights and sharing benefits,’ he continued. ‘Combined with transparent decision making processes, the application of these principles is critical to obtain public acceptance for development of new dams.’

So the war is over – but not the peace. Although McCully found it nonsensical, the water industry has in fact accepted what the World Bank calls the WCD’s ‘core values’ and ‘strategic priorities’ without tying itself down to WCD’s detailed agenda. This means that, despite pragmatism, new hydro projects can only be developed to significantly higher social and environmental standards under significantly more intense public scrutiny. There will also be fewer new dams than there might have been.

This follows logically from a new water resources development methodology that is steadily taking shape. This calls for significantly better management of existing resources first with new building a distinct second. And once the decision to build has been taken, investment will only be channeled to what might be called ‘reformed’ projects that follow guidelines such as JBIC’s.

The next step is to learn from Evian how much more finance the sector will have to work with.