A recent study on global large-dam projects by Oxford University's Saïd Business School says large-dam projects experience cost and time overruns and suffer a very low cost-benefit ratio and concludes that small-dam projects are better. However, in its argument against large dams in favor of small dams, the study provides a rationale for fossil-fuel energy plants. The International Commission on Large Dams finds the results of this study to be deeply flawed. The main weakness is its focus on time and cost overruns without addressing the true challenges of power supply, water resources and what's best for the developing world.
The study is based on a sample of 245 dams that do not reflect the universe of 50,000 existing large dams, and the statistics employed by the Oxford study vary greatly from the World Register of Dams. For example, the average dam is 77 meters high in the Oxford study but only 25 m high in the register. The average power capacity is 487 Mw in the study but 100 Mw in the register. The same holds true for cost: $1.47 billion versus $60 million. The average extra cost, according to the Oxford study, was $760 million, but the reality is $15 million.
Even given the flawed statistical foundation of the study, traditional cost-benefit analysis is biased against dams, which, in fact, operate for as long as a century with low costs. Even with this method, hydropower is usually, worldwide, the most economic way for power production other than coal. A recent study by the International Renewable Energy Agency on the levelized cost of energy shows hydropower to be the lowest cost option of all renewable energy.
The Oxford study, unfortunately, completely ignores the climate-change problem and doesn't provide any viable alternative to large dams and hydropower.
"Policymakers should prefer energy alternatives that require less up-front outlays and that can be built very quickly," the study authors write. What would they be? Without explicitly saying it or mentioning fossil-plant carbon emissions and climate change, the authors use a purely financial reasoning to bring us toward a carbon-emitting electric system.
Serving the Poorest Nations
The simple truth is that the poorest countries of Africa, Asia, and South and Central America depend on large dams for power and water. ICOLD, together with other international scientific institutions, has signed a declaration on water storage for sustainable development because we see an urgent need to build more water infrastructure that operates economically and safely without environmental harm or social inequity. Much progress has been made.
While the Oxford study fails to recognize this, it has other flaws, too. For example, the basic sample data, such as height and construction time, are closer to those of very large dams as financed by global financial institutions. But the average cost overrun of 99% claimed by the study seems totally unjustified by the six references cited in the sample: the Asian Development Bank, World Bank, World Commission on Dams, Tennessee Valley Authority, U.S. Army Corp of Engineers and U.S. Bureau of Reclamation. The cost overrun in constant dollars for 184 dams built by these organizations averaged 24%.
The 99% average overrun claimed in the Oxford study can't be explained by the given references. One possible explanation could be that the Oxford authors included in their calculations 20 or 25 dams that had very large cost overruns, including one that had a 5,000% cost overrun. That could explain 20% of the 99% claimed cost overrun! But the Oxford authors fail to name this extraordinarily overbudget dam, so there's no way to know for sure if it is skewing the results. I hope the authors make their data and methods public so we can better evaluate their conclusions. Until then, the conclusions must be rejected.
Adama Nombre is president of the Paris-based International Commission on Large Dams and can be reached at +33-1-47-04-17-80.