Industry Group comments on the WCD report

Harza Engineering- Refaat Abdel Malek; Hydro Quebec- Jean-Etienne Klimpt; Siemens- Donald O’Leary; Electricite de France- Jean Michel Debernay

• We in the industry have read the final report and would like to commend the WCD for their tireless effort and dedication in putting such a comprehensive work together.
  
  

• The industry group shares the core values and principles underlying the seven strategic priorities.
  
  

• The final report presents a number of good observations. However the overall tone on the report is negative in regards to the role of dams, which tends to undermine the report constructive elements.
  
  

• However the industry believes that if all of the guidelines and recommendations on the report were implemented they would essentially take decisions away from local government, thus hindering their ability to implement direly needed water resources projects.

Addressing Existing Dams

• The Industry group concurs with WCD on the importance of this issue.
  
  

• The real life situation for most hydropower/ dam owners is that their operation is under regulatory operating rules, and environmental management plans.
  
  

• Where such rules do not exist, responsible owners develop rules in regards to dam safety, agreements with local communities and environmental compliance.
  
  

• The proposal for a "comprehensive, integrated, cumulative and adaptive" periodic evaluation at intervals of five to ten years is not an appropriate use of resources. Owners evaluate their projects every 35 to 50 years at re-licensing or refurbishment, or earlier when project environmental monitoring programs dictate. These safety and environmental programs work well where they are in place.
  
  

• The industry recognises that social and environmental conditions change throughout the lifetime of the project. These changes should be taken into account provided the owner compensation is guaranteed.
  
  

• Given the importance of this priority the Industry Group recommends that Financial Institutions work with borrowers to ensure that sufficient financial resources are available to address these issues

Recognising Entitlements and Sharing Benefits.

• Recognising entitlements and sharing benefits with local communities are essential preconditions for sustainable development, and the industry supports the concept of benefit sharing.
  
  

• Stakeholders who need water, electricity and food must be part of the negotiation process. However, the industry is concerned about the practicality of all affected people being part of the negotiation process.
  
  

• The industry agrees that the decision making process can be guided by the free, prior informed consent of stake holders but giving a veto right on development projects to one constituency at the expense of the rights of others not having such veto rights is not appropriate.

In summary, implementation of WCD'S approach will take considerable time and delay much-needed water and energy projects.

• We must educate and help to identify the various issues and constituents whose rights and risks are at stake, and allow them to help facilitate the strengthening of existing guidelines.
  
  

• The Industry will work within an improved framework that will lead to better projects, more energy, more dependable water supply and liveable environment for the 3.5 billion people living in water stressed countries and the 2 billion people that lack electricity in their lives.
  
  

• We appreciate the opportunity to contribute to these discussions and look forward to working towards these goals in the future.

Past performance Industry Group thinks that the report's global picture is not balanced

• Could we really extrapolate the result of such a limited sample?
  
  

  - 8 case studies, some quite old.

  Out of a total of 45,000 large dams.

  ­ 125 cross-check references

  Chapter 2 : Technical, financial and economic performance

• Dams results in terms of cost and delays are not different than other major infrastructure projects.
  
  

• Very little consideration is given to societal and secondary benefits (i.e.Grand Coulee 50/70% of additional regional benefits)

Chapter 3 : Environmental performance / Greenhouse gas emissions

• A large-scale hydropower project will on average emit lower quantity than thermal power.
  
  

• Main point is not gross emissions but net emissions.
  
  

• The specific characteristics of a long & shallow reservoir in a tropical zone can't be extrapolated. Serious research on tropical reservoirs has not been made.
  
  

• Hydro, when compared to thermal is contributing to reduce all other air pollutants (direct waste heat contribution to global warming, acid rain generation).

Chapters 3/4 : Social performance

• Necessary Change in practice in the past 50 years and even more in recent years.
  
  

• Environmental assessment of dam’s projects rose from 17% in the 50's to 65% of the project in the 90's. (p.89)
  
  

• Information / participation of affected people rose from 20% in the 50's to 60% of the projects in the 90's.
  
  

• We support this ongoing and global trends

Chapter 4 : Global performance

• If dams had not been built?
  
  

• How would the 1 billion people dependant on food produced by dam-related irrigation survive?
  
  

• Where would the electricity for 1 billion people come from?
  
  

• What would be the global consequences for the planet?
  
  

• more acid rain?
  
  

• more air pollution?
  
  

• more global warming?

Energy and Electricity Options

• What the Report Says
  
  

• Development of Worldwide Gross Power Generation According to Types of Energy
  
  

• Implications of Slowing Down of implementation of Hydroelectric Projects Energy and Electricity Options-:
  
  

  What the Report Says

• Provides Schematic of Electricity Options
  
  

• Highlights Demand-side Management; Supply- side Options (Supply-side efficiency; New Generation Options (Wind/Photovoltaics); Electrification in Rural Areas; Obstacles and Enabling Conditions
  
  

  COAL OPTION (HIGHEST GENERATION SOURCE) HARDLY DISCUSSED

  Energy and Electricity Options- Development of Worldwide Gross Power Generation

  According to Types of Energy

• Over the period 2000-2010, the mix of technologies used (nuclear; hydropower and other renewables; gas: oil and coal) for power generation will remain unchanged with a major increase in the % of gas-fired generation and modest decreases in % of nuclear, oil and coal-fired generation Energy and Electricity Options -Implications of Slowing Down of Hydroelectric Projects (HYDRO DOWN: COAL UP)
  
  

• Since China and India are the major developers of hydroelectric projects and their resource base is rich in coal but very light in natural gas, it is very likely that the gap will be taken up by coal-fired generation
  
  

• RESULT: Increases in GHG Emissions; Acid Rain and Particulates
  
  

  Electricity Options-Final Comment

• WHILE INDUSTRY SUPPORTS NEW AND RENEWABLE TECHNOLOGIES, IT IS OF THE VIEW THAT ONLY EFFICIENT CONVENTIONAL THERMAL AND HYDRO TECHNOLOGIES CAN PROVIDE THE REQUIRED QUANTITY AND QUALITY OF ELECTRICITY THAT IS NEEDED BY DEVELOPING COUNTRIES.
  
  

• Chapter 7 correctly sets the debate on dams in the wider context of the political debate on development. It proposes a rights-and-risks approach as a framework for recommendations.
  
  

• p.200: "Reference to the human rights framework means those policies that deny the rights of some to fulfil those of others cannot be adopted"
  
  

• The above statement includes recognition of the rights of the majority: In this sense the Commission correctly emphasises the need for negotiated settlements between stakeholders, but contradicts itself by granting one stakeholder -indigenous people- the equivalent of a veto right - free, prior and informed consent (thereby denying the rights of others, if a veto is exercised.). The equity principle must be applied so all local population is treated on the same basis.
  
  

• Chapter 7 recognises the real dilemmas facing governments, trying to simultaneously satisfy urgent needs, and advance fundamental rights (p.204). It also confirms that respect for fundamental rights is not negotiable, and therefore cannot enter in a balance sheet approach.
  
  

• This recognises the right of all (including the majority who benefits from dams) to an adequate standard of living as a fundamental right (Universal declaration of Human Rights, Article 25).
  
  

• However, these moral and policy foundations of the report must apply to all development processes not only dams. The rights and risk approach cannot be applied exclusively to the dam industry this would negates the rights of the dam industry to effectively compete, as other options would not have to respect such a negotiated approach: (ex. the oil/gas drilling industry, coal mining industry etc.). As such, multilateral institutions and national government should not impose this approach only on dam development.
  
  

• Chapter 7 confirms that " a process that is too complex can needlessly delay decisions and deprive potential beneficiaries of the fruits of any of the development alternatives." (p.209) This is a key to assess the efficiency of any decision-making process, a core value of the WCD.
  
  

• Chapter 7 also insists that "Negotiated outcomes do not replace government decision-making: on the contrary, they rest on the State actively fulfilling its role as planner and enabler of development choices, as well as its responsibility to provide services and safeguard entitlements". (p.209). However the vision of the State is very liberal ("hands-off") as the role of the State is essentially to endorse development choices negotiated by others. (p.210) This is an ideological position that should be challenged.
  
  

• p.210: the WCD gives clear criteria to assess the decision-making process: fair, wise, efficient, stable. These should be used to assess the WCD process proposed in Chapters 8 and 9.
  
  

  Strategic Priority 1: Gaining public acceptance

• Public acceptance is an objective for most decision-makers, particularly politicians, and the industry group supports the notion of seeking broad public support for projects. (not only dam projects.)
  
  

• However, public acceptance does not mean absolute consensus. This point must be clear. The competing nature of interests involved in water resource development make such consensus elusive, if not impossible. This "can needlessly delay decisions and deprive potential beneficiaries of the fruits of any of the development alternatives."
  
  

• Governments, as responsible, elected and representative bodies, must arbitrate the competing interests, where consensus is not reached within reasonable time.
  
  

• Is there a veto right to each potentially affected individual? It must be very clear that even within local populations some kind of majority rule must prevail.
  
  

  Strategic Priority 2: Comprehensive options assessment

• Options assessment is a crucial first planning step, and has been performed from a technical and economic perspective for a long time and we support increased incorporation of social and environmental factors.
  
  

• However, options assessment cannot integrate representatives of all stakeholders potentially affected by an option (positive or negative) as this would include, for electricity options, representatives from the whole population of a region / country. (equivalent to a parliament or congress.)
  
  

• Extensive, all-inclusive OA requires well staffed, resourceful government institutions, precisely the commodity least available where the needs are greatest.
  
  

• The quantity and quality of data and knowledge demanded at the OA level are unnecessary excessive (ie only generic LCA must be used )
  
  

• Multicriteria analysis must not only consider impacts but also their effective mitigation and compensation measures.
  
  

  Strategic Priority 3: Addressing existing dams

• Most dams are already being monitored at key periods in their lifetime (end of license, or refurbishment) for safety, environmental and technical aspects.
  
  

• The proposal, in the report, to increase the frequency of periodic evaluation, will simply create an extra burden on those dam operators which are already inspected, and comply with regulations, creating an additional competitive advantage to other – mostly fossil-based developers.
  
  

• The review period frequency must be adapted to the problems they address. Dam safety inspections must be carried out continuously .In case of environmental parameters the best tool is an ongoing environmental management program.
  
  

• To review each five to ten years all operational parameters of each dam with independent review panel and full public participation is not necessary, very costly and will deter private investment .The review period must be tied to the licensing period.
  
  

  Strategic Priority 4: Sustaining rivers and livelihoods

  requirement 4.1 is a moratorium on all water-related development:

  "A basin-wide understanding of the ecosystem's function, values and requirements, and how community livelihoods depend on and influence them, is required before decisions on development options are made." (p.234)

• We are concerned by the length and the cost of the baseline studies. Today only developed countries have accumulated part of the required knowledge .The WCD recommendations will require developing countries to begin to accumulate a knowledge base : a major funding by the multilaterals
  
  

• Ecosystemic knowledge is necessary, important and has been improving gradually over the last 30 years, but to make such all encompassing knowledge a pre-condition for development is equivalent to a moratorium on every water resource project.
  
  

• We support the advoidance of significant impact on endangered species but decisions must be made using multicriteria analysis.
  
  

• There is a need to better define the minimum knowledge that is required at each step of the process.
  
  

  Strategic Priority 5: Recognising entitlements and sharing benefits

• Recognising entitlements and sharing benefits with local communities are essential preconditions for sustainable development. The Industry group agrees.
  
  

• The industry disagrees with the proposed legalistic strategy in the Report with multiple binding contractual agreements. This will work in countries with a strong judicial system, but will break down anywhere else.
  
  

• What the industry proposes is to have the affected communities as direct beneficiaries or part owners of a project's output, as reflected in guideline 20, p.300.
  
  

• We are concerned by the decision role that is given to the stakeholder forum. This forum can bring valuable proposals but cannot be a decision body.(page 285)
  
  

• We question the feasibility in some countries of having resettlement with: land for land, as a community, close to the original habitat. (page 242)
  
  

  Strategic Priority 6: Ensuring compliance

  1. Industry believes that the need for compliance is absolutely necessary

  2. Therefore ensuring compliance must target dams in areas defined above, and prioritise compliance mechanisms: e.g. (a) safety, (b) health, (c) environment etc.

  3. Multilateral, bilateral and other funding mechanisms to favor compliance (trust funds, etc.) should be tested.

  4. In the case of the use of performance bond and trust funds, compliance criteria should be achievable and measurable

  5. The industry recognise that most of the time the compensation and resettlement programs are managed by national or local authorities and that compliance is a political and resource problem in some countries.

  Strategic Priority 7: Sharing rivers for peace, development and security

• The need for co-operation between political jurisdictions on issues relating to dams and water development projects is real, as stressed in the Report.
  
  

• However, policy principle 7.3 "Dams on shared rivers are not built in cases where riparian States raise an objection that is upheld by an independent panel." gives the "independent panel" an unreasonable power, above that of both States.
  
  

• It is essential to respect existing treaties between countries.
  
  

• Good guidelines exist. (e.g.World Bank, IEA 2000 for hydropower)
  
  

• the WCD is proposing another set of guidelines, with some good, some new, some infeasible. The unfeasible nature of some of the guidelines have to do with:
  
  

• utopian decision-making process ("stakeholders have an equal opportunity to influence decisions" (p.280, guideline 2)
  
  

• unproven methodologies (guideline 10: valuation of social and environmental impacts) ie. assigning a $ value to non-quantifiable impacts.
  
  

• cumbersome and rigid administrative procedures (guideline 19)
  
  

• heavy bureaucracy (guideline 22) "Independent review panel (IRP) should be established for all dam projects." (p.302)! there are over 45000 large dams in the world: 45000 IRP's ?
  
  

• The problem is not dams. (or roads, or airports, or cities). The problem is in their governance: there are well-designed, well-managed and productive dams, as there are well-designed, well-maintained and useful roads. The opposite is also true.
  
  

• The problem, then, is one of policy (the why and how, for whom), not one of technology (what).
  
  

• Dams, built for people, local and others, with environmental sensitivity, are OK. The WCD makes such a distinction, and proposes a political process (e.g. "decision-making process") which should revolutionise the way major infrastructures are built, by putting all those at stake in the center of the process.
  
  

• This ambitious political goal ("a comprehensive and integrated policy framework") has the qualities and the drawbacks of its ambitions. One major drawback is that governments around the world have their own vision of how to develop their resources - water and others - and might or might not want to integrate the political advice offered by the WCD.
  
  

  Conclusion

  1) THE INDUSTRY GROUP:

• Shares the core values and the principles underlying the seven strategic priorities.
  
  

• Supports several key recommendations of the report:
  
  

  1. affected people should benefit from the project and their rights fully respected

  2. negotiated solutions must prevail

  3. compliance has to be ensured

  4. a better balance has to be achieved between technical, economic, social and environmental issues

• believes that the whole WCD process has positively contributed to raising the political profile of the challenges facing the world in terms of water and energy security.
  
  

  2) HOWEVER, it is the Industry Group's opinion that:

• the report is not serving development in making dams appear to be the `last resort'
  
  

• the contribution of hydropower in the reduction of global warming is not properly acknowledged
  
  

• in their current form, the 26 guidelines do not constitute a set of operational tools for better project development, notably because:
  
  

  1. the need to reach a full consensus between stakeholders is likely to hinder any project

  2. key decisions should remain in the hands of informed, elected representatives

  3. financial and institutional consequences of the recommendations were not properly taken into account

  3) Therefore, THE INDUSTRY GROUP PROPOSES to:

• participate in a working group with other stakeholders under the auspices of the World Bank to develop operational recommendations integrating the good ideas contained in the WCD report. In the meantime, existing project approval processes should remain in place.
  
  

• Help countries which wish it to revisit their own regulations