Second WCD Forum Meeting
Sharing the Knowledge - Charting the Future
April 6-8, 2000 - Cape Town, South Africa

"Where we stand: The Industry Group Viewpoint"
A position paper to the WCD Commissioners

The WCD Industry Group is drawn from forum members in the private sector and financial contributors. ABB and Hydro Quebec initiated a workshop of the group prior to the Forum Meeting in Cape Town, April 2000.
The outcome of the workshop was presented to the forum members. What follows is a transcription from the Power Point slides used at this presentation.

Participants: ABB, ABB Alstom, Atlas Copco, Coyne & Bellier, Enron, Harza, Hydro Quebec, Lahmeyer, Siemens, Skanska

Agenda

• Introduction
• Benefits and hard facts
• Compliance and mitigation
• Management
• Improvement and issues
• Requests to stakeholders
• Next steps

WCD - Industry Group Position
based on its competence, the Industry Group mainly focused on hydropower dams

Dams…

• Provide important services
• irrigation and power generation
• water supply and flood control
• Include all three dimensions of sustainable development, Social - environmental - economic
• Facilitate economic growth and generate business opportunities and employment

The future of dams is of great concern for industry but there must be a balance between development and conservation!

The World Commission on Dams is very important: It is a full-scale test of the process of sustainable development

• initiated by IUCN & World Bank Group
• multi-stakeholder involvement
• transparent
• focused
• setting new guidelines and criteria

WCD can be a model for developing infrastructure projects - industry wants to learn

Past experience with dams not always positive

• underestimated risks
  • technical and economic
  • environmental and social
• different views on roles and responsibilities (changing over time)
  • governments
  • operators
  • suppliers and contractors
  • consultants
  • civil society

Knowledge-base of all aspects of dams has developed over the last hundred years

Lessons learned - industry is doing and will do a better job

Role of the private sector

Nearly all dams in the past were Government projects, in which the role of industry was restricted to building the scheme

Since the 90’s the role of the private sector is expanding. Dam projects of the future will often be funded and developed by the private sector. This creates new responsibilities.

But private sector projects require: reasonable rate of return, short leadtime, predictibility of decision process

Private sector - Shared responsibilities

As developer of future dam projects, the private sector shares responsibility for technical, environmental, social and financial aspects

The choice of future projects will increasingly be driven by the interaction of market forces, comprehensive options assessment, stakeholder participation and government policies

Why can we build good projects now?

1. I. Greater awareness
   • multi-stakeholder involvement
   • environmental & social aspects
2. Better technologies
   • better modelling
   • Roller Compacted Concrete dams
   • efficient turbines/Powerformer
3. New knowledge
   • WCD 17 Thematics, 10 Case studies
   • WCD Final reports
   • inhouse recent experience
4. New tools
5. • "IEA 2000", ISO 14001, ICOLD
   • LCA - DFE

Benefits of large dams

Least-cost way to store large quantities of water (to make provisions for droughts or seasonal rainfall cycles)

Proven option for electricity supply, water supply, and irrigation

Provide flood control as a side-benefit to having a reservoir

Potential for recreation, fisheries & environmental protection of surrounding watershed (to ensure water quality, erosion control)

Reservoirs may be very productive ecosystems

Benefits of hydropower

It is the only renewable energy technology commercially available on a large scale (20% of world electricity supply)

It produces negligible amounts of SO2, NOx and greenhouse gases

It easily adjusts the amount of electricity produced to the amount demanded by consumers (load following) and provides ancillary services

It is the only renewable power generation technology that allows multi-purpose use of water resources

Hard facts: General points

In many cases, dam projects can generate development opportunities for the affected population, which would not exist absent the projects. There is a need for both development and equity (fair sharing of benefits).

There are no "innocent" technologies - all have environmental and social costs

A fair comparison of options require life-cycle analysis (LCA) and accounting for environmental/social benefits and costs

Hard facts: Water

Demand for water is increasing and will continue to do so, despite savings by demand-side management, particularly in emerging economies

The water sector is in a crisis in many countries, partly due to lack of funds and non-market based water tariffs

To improve the water supply situation, capital from the private sector is essential

Governments will continue to be involved in the development of water resources projects (at different levels - regulations, public private partnerships, planning,...)

Hard facts: Power

Electricity is one of the key tools for development

There are 2 billion people without access to electricity

Demand for electricity is increasing and will continue to do so, despite savings by demand-side management, particularly in emerging economies

Emerging renewable power technologies (solar, wind) produce intermittent power, limiting their penetration to a fraction of total generation

Implementation and Mitigation (Planning -> Decommissioning)

Good practice (environmental and social assessment) is achieved by ensuring that environmental and social concerns are integral components throughout the life-cycle of a project.

Planning - Feasibility studies

• Feasibility studies incorporate EIA and SIA
• Full participation of affected communities
• Use lessons learned
• EIA and SIA to include health aspects
• EIA and SIA to include provisions for implementation and monitoring
• EIA and SIA to be independently reviewed

Planning - Environmental Impact Assessment

• Schemes’ water releases rules should take into account the needs of the affected communities and the natural environment
• Sedimentation
• Aquatic and terrestrial flora and fauna
• Minimize projects’ adverse effects on the life-cycle of species
• Evaluate the effectiveness of mitigation measures

Planning - Social Impact Assessment

• Resettlement planning should be prepared to the same standards as the technical aspects of the project
• Cooperate with social and economic agencies (not only government agencies)
• Enhance development opportunities for affected communities. However, this should be financed by the government

Licensing

• Licensing processes have to be based on clear implementable guidelines taking into account existing best practice
• Industry is looking to WCD to provide these guidelines
• Provided they are generally accepted, the Industry Group recommends incorporating WCD guidelines into the ISO 14001 Environmental Management System

Compliance

• Environmental Management Systems (EMS) offer an efficient tool for compliance
• ISO 14001 is the only world-recognized EMS
• ISO 14001 offers systems for regulatory compliance and continual improvement
• ISO 14000 family also includes standards for performance evaluation and life-cycle assessment

Dam Management and Operation

The Industry Group recommend:

For each dam or group of dams, in consultation with local population and communities:

Dam Management and Operation

1. To create and maintain an environmental management plan/system (ISO 14001) for:
   • monitoring the social and environmental impacts
   • monitoring the effectiveness of the mitigation measures designed in the planning phase
   • controlling and documenting compliance
   • managing stakeholder feedback
   • improving the environmental performance of each installation
2. To closely monitor the technical performance of each dam and associated components
3. To apply immediate corrective measures to address potential safety problems
4. To manage and regularly test the emergency preparedness plan in collaboration with the local downstream communities and reservoir & river users
5. To develop and manage a health control program with the local health authorities whenever a reservoir and/or its operation creates a health risk
6. To support reservoir fisheries and community uses of reservoir, where applicable
7. To optimize local and regional economic spin-off opportunities created by the dam project

Environmental and social problems inherited from the past

Solution: The Industry Group recommend that these problems be solved by dialogue and negotiation between governments, dam owners and operators, and affected parties, based on scientific studies and equity principles.

Maintenance and refurbishment

Optimizing the electricity output can be undertaken by refurbishing existing hydropower plants provided that these modifications would not create unacceptable new impacts.

These improvements might require a regulatory process which should be efficient, cost effective and allow the participation of the local population.

The owner/operator of a dam should develop and implement a maintenance program.

Decommissioning

No mandatory decommissioning should take place without a complete Feasibility Study, Environmental and Social Impact Assessments, and compensation for the affected parties.

The Environmental and Social Impact Assessments should include detailed studies of impacts of alternative solutions that would provide the same amount of power or water, as appropriate.

How is industry willing to improve?

To take holistic approaches to projects today including a combination of technical, financial, environmental and social measures

To be responsible for the mitigation of impacts caused and the compensation of impacts that cannot be mitigated

Main issues for Industry

A choice of responsible contenders to ensure that all aspects of the project including environmental and social measures are undertaken

The decision-making process, including the Environmental and Social Impact Assessments, should be streamlined and more predictible

The decision making process must be credible, effective, efficient and transparent

Solutions to past grievances must be negotiated between governments and concerned stakeholders

Industry Group expectations

of civil society:

All stakeholders, including NGOs, accept the result of an open multi-stakeholder process based on the WCD guidelines for water-resources projects

All stakeholders, including NGOs, should adopt and follow a code of good conduct (including transparency) regarding the decision-making process for new projects

Of Governments:

Clear policies for involvement of the private sector in water resources development (hydropower, water supply and irrigation). Inter alia, these policies should include (assuming market-based cost of capital):

• Resources for options assessment and Feasibility Studies for dam projects
• Streamlined regulatory and permitting procedures
• Facilitating financial sustainability of the power and water supply sectors
• Commitment to undertaking land acquisition/resettlement of projects involving the private sector in accordance with best practice
• Provision of sovereign guarantees, as required
• Commitment to an inclusive, transparent, decision-making process
• Commitment to the equitable resolution of outstanding grievances relating to past water resources projects
• To resolve outstanding disputes on international rivers in accord with accepted international norms
• Use state-of-the art bidding procedures to assure all aspects of the project (including environmental and resettlement components) are implemented in accordance with specifications

Of International Financing Institutions:

Financing of options assessment and Feasibility Studies for dam projects in member borrower countries, when so requested

Provide financial rewards (including extending the term of loans) for project developers complying with the WCD guidelines

Improve staff capacities and skills for technical environmental and social evaluation of dam projects

Use state-of-the art bidding procedures to assure all aspects of the project (including environmental and resettlement components) are implemented in accordance with specifications

Next steps April - December 2000

A. Rework II.1 Dams & ecosystem, V.4 Regulation, compliance & implementation
     Adjust III.1 Economics, financial & distr. analysis, IV.5 Operations, monitoring and decommissioning of dams

B. Make reality check of WCD’s recommendations prior to final approval by the Commission

C. Implementation of WCD recommendation:  The Industry Group firmly recommends: the ISO 14001 system to be used

D. The Industry Group wants to participate in dissemination of WCD recommendations