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	Other Thematic Reviews...     Main review page I.1 Social Impacts I.2 Indigenous People I.3 Displacement & Resettlement II.1 Ecosystems & Environment II.2 Dams & global change III.1 Economic analysis III.2 Project financing IV.1 Electricity supply IV.2 Irrigation IV.3 Water supply IV.4 Flood control IV.5 Operation & decommissioning V.1 Planning approaches V.2 Environmental and social assessment V.3 River basins - institutional frameworks V.4 Regulation & compliance V.5 Decision-making processes     Main page for this review
	V.1 Planning approaches Executive Summary - November 2000

Planning Approaches

Executive Summary

1. Introduction

This paper looks at evolving practices in water and energy resource planning in the context of the debate on large dams, also taking into account wider views about the circumstances and our changing notions of sustainable development. It considers the attributes of planning processes seen by many constituencies as a way to respond to controversies surrounding large dams, and more generally, to improve decision-making so as to achieve more widely accepted development outcomes. In doing so the paper highlights integrated planning approaches that are inherently open, adaptive and flexible. These may support decision-making on public investment in infrastructure and programmes to improve or expand water and energy services for different urban or rural-based beneficiary groups, or alternatively, they may underpin the design and development of regulatory policies and frameworks where private or corporate investment is employed to provide such services.

The paper also highlights the use of stakeholder-driven multi-criteria analysis (MCA) techniques to assess and compare new development options and ways to manage and operate existing infrastructure, as such choices arise at different stages of the planning and project cycle. MCA techniques permit stakeholders to determine the basis for evaluating the range of options under consideration including specification of the qualitative and quantitative criteria for such evaluations, and the relative weight of each criterion. Properly implemented MCA exercises can open up planning processes and thereby maximise transparency, participation, and ultimately the degree of acceptance of the development decision. This can translate into lower overall risk and uncertainty, or at minimum a better understanding of the risks associated with the selected option for the stakeholders. Thus the prospects for, and the terms of financing from sources other than government tax revenues may be enhanced.

The contents of the five sections of the review paper are as follows.

Section 1 introduces the main controversies in the dams debate that have arisen around dams-related planning and development outcomes. The controversies often reflect very different views about how to achieve sustainable development, about the distribution and equity aspects of development programmes, and on the degree of empowerment, transparency, and participation in planning and decision-making. This section ends with a discussion of broader planning principles suggested as good practice for planning. These are the same principles that emerge from the global debates on human rights, development and sustainability, which are increasingly seen by the different constituencies as a way forward to address issues raised in the dams debate and reflect current development thinking.

Section 2 describes the types and levels of planning that underpin decision-making processes for water and energy resource development, particularly for the identification and selection of specific projects. Four generic categories are used to characterise the various types and levels of planning. These either support front-end decisions about whether to develop dams or other options, and their timing or sequencing; or decisions further along the project cycle such as when and how to change the operation and management of an existing dam, or decommission an existing dam. These four generic categories are noted in the following table.

General Categories of Planning	General Levels of Planning
Policy /Regulatory Planning Strategic Planning Programme and Project Planning Operational Planning	Community level Regional level (within province or state) National/ Provincial or State Level Regional Level (two or more Countries) (with different units of planning – eg geographic, hydraulic or sectoral)

Section 3 reviews different approaches to water and energy resources planning that exhibit comprehensiveness, integration and participation. The traditional planning and project cycle is first discussed as a frame of reference. The elements of integrated resource planning (IRP) are then discussed, followed by examples of their application and use. A more detailed elaboration of IRP- type procedures applied in the water and power sectors is contained in Annexes 3 and 4.

Section 4 looks at the use of multi-criteria analysis (MCA) formulations used to prioritise or decide among development options or projects. Examples of how MCA tools and techniques have been used to assess alternatives and to identify stakeholder preferences for the different programmes, plans, or projects that have been identified during planning processes are provided. The last part of Section 4 includes a discussion of the relationship between MCA, cost-benefit analysis (CBA) and risk analysis. Other methodological issues associated with MCA techniques are further elaborated in Annex 6.

Section 5 highlights the key findings and lessons that are offered to support the WCD’s work in developing criteria and guidelines for the future planning and decision-making on dams or alternatives to dams.

This paper draws on information contained in the other sixteen thematic review papers prepared for the WCD process and also on a small survey of planning issues conducted at the start of this review. Additionally, this paper attempts to reflect the perspectives provided in the submissions received by the WCD on past and current planning practices for large dams and water and energy resource development. These submissions are listed in Appendix II and are available on the WCD Web page (www.dams.org).

2. Planning Context and Issues

In human terms, water and energy services and the means of providing these services can have far reaching impacts on the lives and livelihood of large segments of society as well as on different generations over time. This is due to the essential nature of water and energy in daily life and the long lasting nature of many programmes that change or alter river systems. The imperative to supply growing populations, economies, and natural systems with water in a context of depleting groundwater resources, declining water quality, and increasingly severe limits to surface water extraction in many water-stressed regions of the world has brought sustainable water resources management to the top of the global development agenda. Access to clean water for drinking, health and sanitation is one of the major development issues today and central to poverty alleviation. Similarly, about 2 billion people have no access to modern electricity services.

During the 20th century, large dams emerged as one of the most significant and visible tools for the management of water resources. Today there are some 45 000 large dams in operation in over 140 countries around the world. Large dams currently provide about 19% of the worlds electricity supply, 12-16% of the irrigated food supply and provide municipal water supply, flood management, navigation and other services. Most of the world’s large dams were built since the 1950’s, when their construction became synonymous with development and economic progress. China alone is estimated to have half the world’s large dams, yet only had some 200 large dams in 1949. The scale and pace of building large dams in the post World War II period was such that at its peak in the 1970s, on average, two or three large dams were commissioned each day somewhere in the world.

Planning, and the issues that prompted the building of these dams, varied from country to country. In most cases, governments considered that dams were a strategic investment with multiple benefits and economic multipliers or spin-offs. Often, locating the money to build a dam was the main concern of utilities and planning agencies rather than assessing and weighing the relative merits of dams and other alternatives for providing water and energy services.

As noted in Section 1 of this paper and in the other WCD thematic reviews, approaches to planning and investment decision-making common in previous decades would be highly contested if applied today – certainly the scope and range of considerations have become much more varied and complex. For example, it is recognised that dams fundamentally alter rivers and transform natural resources, frequently entailing a reallocation of benefits from local riparian users to new groups of beneficiaries at a regional or national level. A comprehensive approach to integrating social, environmental and economic dimensions of development is now considered appropriate given our growing understanding of the full dimension and extent of environmental effects of large dams. And at the heart of the dams debate today are issues of environmental sustainability, equity, governance, justice and power – issues that underlie the many intractable problems faced by humanity in taking development decisions. These issues all enter into, and must be accounted for in planning water and energy resource planning approaches in today’s context.

2.1 Planning Systems

Water and energy resource development usually combines large investments with many distributed smaller investments – either on the demand or supply side. These may be complementary or mutually exclusive either in physical terms or in terms of affordability. Individual supply projects vary considerably in scale and costs as well as their extent of public agency, local community and private sector involvement, and their intended beneficiaries – that is whether the investments are intended to meet rural, local or urban/industrial needs, or some combination of these needs.

The actual planning system in a particular country, state or province depends on a number of political, economic and cultural factors. The size of the country, its resource endowment relative to the size of the population, and the urban-to-rural population, are also important factors. Historical and cultural aspects also shape how planning systems and practices change and adapt over time.

Regardless of the country context, water and energy resource planning is inherently a complex undertaking. This is particularly so where competing interests and claims over the same water or energy resource must be reconciled, and a shift to equitable and sustainable sharing of the resource is sought. The issues may become highly political where freshwater resources are in limited supply and competition grows between consumptive human uses for water (agriculture, domestic and industrial water use), and the natural environment, perhaps even more so if two or more counties (or provinces) are sharing the same river system or a significant transboundary groundwater aquifer.

In centrally planned economies, governments tend to take an active role at all levels of planning, especially for large infrastructure projects. Often there are rather elaborate national and sectoral planning processes where resource allocation decisions are typically made for the sector as a whole, and for specific projects. Government agencies typically handle project-specific planning and may handle construction and operation.

The nature of planning in market economies and transitional economies is more highly varied and approaches have significantly changed, especially in the last few decades, as more private sector investment from both domestic and international sources is used. Increasingly, markets are being relied on to decide investments, including whether to build specific projects, but subject to the government’s regulatory oversight and project-specific clearance processes. In other cases, government may sponsor or lead the process to decide on whether to develop a project, and then invite the private sector to bid for a concession, or a license, to build and operate the infrastructure. This paradigm fits many countries’ power sectors and water supply sectors, where there is a trend towards licensing and open markets. In many market economies water-related services such as irrigation and navigation sill remain more or wholly within the realm of public investment.

Where the resource (eg river flow) is shared across political jurisdictions, government generally retains the responsibility to negotiate any resource sharing with the neighbouring governments, regardless of whether they subsequently chose to mobilise public or private sector investment, jointly or separately, for a project or for any other development initiative.

2.2 Planning Issues and Large Dams

Despite the variations in overall systems of governance, economies and planning, it is generally accepted that planning processes, or the regulatory policy and framework that sets the ground rules for corporate or community-led planning and investment, should have a number of key attributes. In essence these should make for "better" decision-making and better planning outcomes that reflect changing notions of development and development priorities.

Among these include the following:

• Meaningful participation by a full range of stakeholders is recognised as an essential starting point. This includes the involvement of the relevant government, civil society, professional and advocacy NGOs, and private sector stakeholders at key stages; and especially project-affected communities where specific projects are being considered and they are the targeted beneficiaries;

• Comprehensive resource planning requires full inclusion and equal treatment of all options at early stages in the planning process. Stakeholders should participate in the identification of options and the options should not be "given". This means assessing traditional and non-conventional options, supply-side and demand-side options, and structural and non-structural options in a systematic and thorough manner;

• Planning processes need to be open, so that the application of criteria, the use of data, and the intermediate and final decision-making are "transparent", that is, can be readily followed and understood by interested observers and participants;

• Planning needs to be adaptive and flexible, as participatory and comprehensive planning necessarily generates new information, options, and perspectives; and as conditions influencing the planning context evolve;

• Distinct planning processes relating to infrastructure development and services - whether carried out directly by government, through the private sector, and/or by non-governmental organisations (NGOs) - should be co-ordinated and mutually reinforcing with respect to their contribution toward national/regional and local development goals;

• Geographic areas for planning need to reflect resource ecology and "systems" considerations (physical, ecological, social systems) more than simply observing political boundaries. Co-ordination of planning across political boundaries may be essential. The logical geographic frame for planning may often be a region, or river basin, encompassing only part of a political jurisdiction or, on the other hand, a region encompassing all or parts of multiple political jurisdictions;

• Negotiating outcomes, where feasible, will greatly improve the development effectiveness of water and energy projects by eliminating unfavourable projects at an early stage, and by offering as a choice only those options that key stakeholders agree represent the best ones to meet the needs in question.

• Efficiency in planning must be maintained in the face of both analytic and process complexity. In short, planning processes per se should not create undue obstacles to considering and financing options which have the potential to contribute to sustainable development. This is particularly the case for countries or sectors competing to attract investment from domestic or international sources.

The attributes mentioned above could apply to planning of any major infrastructure investment. Nevertheless, large dams are intrinsically multi-sectoral in nature, and perhaps more so than other types of public infrastructure such as roads, bridges or airports. This in terms of their location-specific nature, the potential range of benefits (eg irrigation, electricity, water supply, flood control, navigation, etc.), the range of direct and indirect costs and impacts including social, and terrestrial and aquatic environmental impacts, the irreversible nature of impacts, and the magnitude of the investment. Thus most dams-related planning crosses many sectors and is currently, either formally or informally, multi-sectoral and multi-objective in nature.

Regional differences may also important. The extent to which the dams-planning debate is driven by economic, social or environmental concerns, or by broader development considerations, varies from country-to-country. For instance, the issues at stake and debated in the United States, where the rate of decommissioning of older dams is greater than the rate of construction of new dams, are perhaps as intense as, but qualitatively different from, the planning issues and the debate in India, which along with China, is now building most of the world’s large dams today.

The sixteen other WCD thematic papers explore some of the social, environmental, economic, and institutional issues of the large dams debate in more detail. These issues tend to converge during the planning phase when stakeholders regard them as important considerations when decisions are taken. Consequently, and as discussed in the paper, MCA analysis techniques offer some advantages in transparently considering such factors as part of the decision criteria.

While the dams debate exhibits many areas of potential for broad agreement noted above, the submissions received by the WCD from "pro-dam" and "anti-dam" constituencies shows differing perceptions on such matters as:

• the extent to which national legislation and the embodied policies for water and energy resource development shape, and are translated and reflected practically in planning processes and outcomes;
• the extent to which codified and non-codified rights of access to land and water resources for local communities are considered when decisions to transform these resources and the access to the resources are taken, such as by building dams;
• the extent to which all dams and non-dam options are addressed in the early stages of planning before political momentum develops around particular options;
• how early, and the extent to which the local development needs of rural communities affected by dams have been taken into account in planning and decision-making processes;

• the actual form, level, and scope of stakeholder participation in planning and decision-making, and the access they have to financial, technical and other information resources so as to contribute effectively in planning processes;
• the ability of existing planning approaches to balance and reconcile top-down sectoral-driven approaches, typically intended to satisfy urban/industrial development needs, with bottom-up planning approaches, typically more focused on the more basic subsistence needs of poorer rural populations, and the implied conflict over resource use;
• the influence of corruption on decision-making processes;
• the responsibilities and liabilities for problems in the past such as promises made but not kept for displaced families and accountability;
• the extent to which local communities should be able to control or influence resource development decisions;
• the special rights of indigenous groups particularly how such groups are identified and defined; and,
• the extent to which external donors, financing, and other considerations influence planning processes and decision-making outcomes in developing countries which rely heavily on external finance with conditionality.

As the submissions to the WCD have shown, many constituencies believe there is much more to improving planning than just developing a better understanding of the costs, benefits and impacts of large dams, or incrementally improving transparency and participation in planning processes. These are certainly seen as important aspects for improvements by all constituencies, but there are also substantive shifts in development thinking that need to be taken into account in planning. Civil society and NGO groups in particular feel that many governments are slow to adopt the new policies that the governments themselves have subscribed to in regional and international conventions.

The shift occurring in the notions of development – particularly around rural development and sustainable development – are increasingly recognised in the major development reports of the multilateral development banks (World Bank, 2000/2001). Traditionally, national-level economic and financial objectives have been at the core of water and energy resource planning as well as many of the decisions about the optimal use of resources. This is in terms of determining the needs and demand for the water and energy services, the beneficiaries of development investment (eg urban or rural populations, or industries) as well as the feasibility of individual projects or programmes to supply these services to the intended beneficiaries. Increasingly the goal of development is expressed in term of expanding empowerment and, by extension, people’s range of choices and opportunities.

Over the last few decades, environmental, social, and cultural objectives have been increasingly integrated into all levels planning by governments. Unfortunately this integration across multiple objectives and timeframes is often weakly institutionalised and poorly applied for a variety of reasons. Very often weak regulation and the absence of compliance mechanisms means that agreements that have been reached during planning stages, on which the decision to proceed with a project were based, are not honoured. Or else there is no sanction or penalty for failure to abide by such commitments, often to the detriment of the environment, and the livelihood and living conditions of locally-affected families.

Another related shift in development thinking that has direct and practical implications for dams-related planning is the redefinition of project feasibility – increasingly, a project is defined as "feasible" or not more in social and environmental terms, rather than strictly in economic or technical terms.

To accommodate these changes planning processes must become much more flexible, fluid and interactive and allow evolving trends, needs and perspectives to be brought into play. In the dams debate, and in the wider development debate, the expanding of choice and opportunity is increasingly seen as the way forward for countries with large rural populations, particularly where the rural population has been left outside the mainstream of the country’s economic development, and where poverty alleviation is now a priority. Such transformations in planning – either to match new notions of development, or simply to accommodate a shift in development priorities – will require further transformation of institutions and of the planning roles of civil society, government, and the private sector in the water resource area.

This paper does not propose ways to resolve the issues related to planning that are raised in the dams debate. An off-the-shelf prescription is not possible – or indeed desirable. Rather the aim is to point to where planning outcomes may be judged to be superior by the stakeholders as a result of the adoption of good practice planning approaches and techniques.

3. Key Observations on Emerging Practice

Observations and conclusions emerging from the paper include the following:

1. Large dams have traditionally emerged from planning process based at the national, provincial/state or sectoral levels. Two other levels or entry points for water and energy planning increasingly important in today's context are local area, or community-level planning, and regional-level planning which involves two or more countries sharing a river basin or common resource:

• Community-level planning: formal and informal planning initiatives which focus on a specific catchment or section of a river are increasingly common in rural areas of developing countries where riverine communities rely on land-river resources for subsistence and livelihood. Often these initiatives are assisted by civil society and NGO groups, or by user groups empowered by government regulations. Communities may choose to prepare local development plans and then seek the resources to implement the plan (typically there would be a large number of smaller projects), or to defer the planning to local government agencies or to higher levels of government. In either case, community representatives would be present as a full stakeholder in any basin-level planning exercise undertaken by bodies at the national/provincial or state level, or a large river basin entity.

• Regional-level planning: this involves two or more countries sharing a river, surface water body or ground water aquifer. The context is that many regionalisation trends are emerging today that will have significant implications in the future for water and energy resource planning. These activities include the construction of regional gas and oil pipeline networks, regional interconnection of power grids and power planning pools, and obviously transboundary river systems and transboundary aquifers. Planning would necessarily consider the optimal use of resources and impacts over the entire river basin. Complementary development actions at the regional level may lead to more efficient utilisation of resources overall and lower investment costs. There are also significant challenges to co-ordinated action on major problems such as water pollution. Clearly political will is required to harmonise planning activities across political boundaries for equitable and sustainable sharing of resources.

• provide a framework and process where alternative plans for integrated land/water development arising from local and regional levels can be assessed and brought together;
• give guidance or support to local or community-level planning where there is an expressed desire for local planning initiatives – there may be many communities in the basin with different needs and circumstances;
• provide processes to reconcile any differences that emerge in resource use between local-level planning and the national/state/provincial level if they are in conflict;
• co-ordinate with upper and lower riparian areas (other provinces, states or countries) on the harmonisation of planning and development in the river basin and groundwater resources where applicable.

1. Greater emphasis must be placed on the front-end planning stages where the initial needs assessments, and the assessment of options available to meet those identified needs is undertaken:

• Often in the past local communities were ignored as potential beneficiaries of the development project. Given the evolving notions and priorities for development (eg more emphasis on poverty alleviation and equity in the distribution of costs and benefits of development programmes), confirmation of the needs that the planning initiative is intended to meet, and confirmation of the targeted beneficiaries is important. This will help to ensure that there is clarity on the objectives of the development initiative and also help to define the criteria for making any subsequent choices or trade-offs among options;

• Generic as well as more comprehensive options assessments are needed at the front end of the planning cycle. It must be clearly demonstrated that all options have been given serious consideration at an early stage in the planning process, and the reason for rejection of specific options must be explicit and justified. The purpose is not so much to exhaustively characterise all feasible options - the planning process does have to be manageable, as well as accessible to stakeholders - as to consider a sufficient number of diverse types of options to ensure that every conceivable type of option is analysed through the planning process. Diversity among options should reflect significant variations in size, technology, location, risk to stakeholders, and basic approach, as well as intended beneficiary;

• Political levels are increasingly demanding full and comprehensive options assessments from planners in order to respond to growing public awareness and pressure in this regard;

• Generally, more comprehensive and reliable information is needed for planning, particularly relating to the baseline conditions for large-scale water and energy resource projects (eg socio-economic, cultural, environmental, engineering, and other conditions) before individual projects are advanced to more detailed project-level study. Base-line studies of fisheries resources are an example of a situation where multi-year data is needed to realistically assess and fully understand the potential impacts of the dam, or to design effective mitigation programmes.

1. A clear separation of strategic and project planning processes is needed to ensure that all options receive full consideration based on their merits. This helps to ensure that political momentum, or possible institutional preference for specific options does not unduly bias or pre-determine planning outcomes, particularly when there are many choices open to society.

2. The practical application of this is that a dam project that has successfully completed a feasibility study should not proceed automatically the next stage of project planning and development. Rather a project, once demonstrated to be feasible, would then be assessed against other options at the same level of study, and then selected (or rejected) for implementation based on its merits and coherence as part of a larger integrated development plan. Thus a specific project would not normally be approved for construction independent of other development considerations, and would be viewed in the context of a larger river basin plan or sector plan that has been subject to full public and political review. While this approach may have become more standard practice in many countries in the past few decades (particularly in power sector planning), in many settings the decision-making process on large dams is still largely based on the results of project-level studies that are more narrow in scope.

3. Integrated planning approaches, despite their limitations, are among the most effective general approaches for addressing many planning issues raised in the dams debate. Most United Nations (UN) bodies, commissions and ministerial declarations that are directly or indirectly concerned with water resources and sustainable development have endorsed or advocated integrated planning and management approaches. While there is no single prescription, the attributes of integrated approaches typically include:

• Demand and Supply: placing supply-side and demand-side management options to improve water and energy services on an equal footing at an early stage in the planning process, without predetermining the selection of options of planning outcomes;
• Existing Facilities and Services: looking carefully at the adequacy of existing facilities and the quality of services and considering improvements in existing services as an option to a new project, or to defer or reduce the need for new projects;
• Comprehensive Options Assessments: assessing and deciding among options at all levels and stages in the planning process, including policy options, individual project options and alternative plans that consist of a mix of options;
• Consideration of Externalities: allowing for the transparent inclusion and analysis of externalities (non-price factors), which are increasingly important to all segments of society;
• Iteration and Periodic Update: allowing for iteration of planning at different levels to ensure consistency and adjustment and full update of plans at periodic intervals to reflect changing circumstances;
• Open and Participatory Processes: entailing open, participatory processes where an appropriately diverse set of stakeholders is identified or self-identified, where poorly financed stakeholders obtain the means to support effective participation in planning processes. Ensuring that information and studies are made as accessible as possible to stakeholder participants, and that participation commences during the early stages of planning, when planning objectives are set forth, continues during key intermediate stages, and is not relegated to a penultimate consultation phase.

1. There is no single procedural approach to integrated planning and the process must be adapted to different sectors, circumstances and countries. Six steps that are most common include:

1. reviewing and confirming policy objectives including specifying the beneficiaries, the expected distribution of benefits and participation processes, steps, and dates of public notification;
2. analysis of current conditions including the lifetimes, performance, and efficiencies of existing facilities and other assets (projects, transmission and conveyance systems, forecasts for demand, reliability and quality of services, environmental and social issues);
3. identification of individual options to be tested and re-evaluated against assumptions about sustainability, economic, equity, environmental, social, technical performance, affordability criteria, etc;
4. identification of alternative plans (or scenarios) with different mixes of individual options that meet the demand for services consistent with the objectives and risks, and that satisfy political, environmental, social, equity and economic concerns;
5. implementation after approval of plans and projects by governments or regulating agencies;
6. the final phase involves ongoing monitoring. Monitoring and auditing are needed to assure different stakeholders that agreed steps are being carried out. Problems in implementation need to be identified promptly and solved, and if not readily soluble, the project plan itself needs to be revisited and reconfigured in light of lessons from the implementation process.

Integrated approaches for water and energy resources planning have local, national and regional (multi-country) variants in both market economy settings and in centrally planned economies.

1. More attention needs to be placed on the river basin as a basic unit of planning for water and energy resource projects.

• The river basin unit or variations thereof is well suited to planning services such as irrigation, water supply, flood management, and river navigation. The basin or sub-basin provides a framework for integrating sectoral-based planning activities that is commonly concerned with the consumptive and non-consumptive use of water, accounting for land-water resource interactions and environmental, social and cultural impacts. This unit is particularly important in developing countries with high population density in river basins.

• Power sector planning is less limited in geographic extent and except for the hydropower option is not river focused. Hydropower options may be identified in the course of integrated planning activities focused on river basins. They would identify hydropower generation options, which may then be picked up by power sector planning processes.

• Planning based on the river basin unit must also provide the means to reconcile community initiated planning processes with more centralised sectoral planning processes. The latter tend to be top-down and focused on meeting urban/industrial needs with water resources shared by rural communities. Reconciling these perspectives is particularly important in places where a high proportion of the population lives in rural areas, and where a number of communities may have plans that conflict or overlap.

1. Multi-objective and MCA tools are available to integrate the informational and analytical inputs to planning while providing a methodology for weighing issues within any planning framework.

• MCA tools have uses at all key stages of the planning cycle including identification of planning objectives, characterisation and comparison of individual options, and selection of preferred plans that include specific projects;

• Participation and transparency goals can be facilitated and operationalised through multi-criteria processes, and political levels ultimately responsible for decisions can be better informed at each step;

• MCA techniques can also be used subsequently at the project planning level and further along the project cycle, or periodically when economic, environmental, or other regulation changes are introduced that would require a change in operations affecting water use allocations, and where trade-offs may be involved.

A general conclusion is that planning processes must seek to identify and promote options, which improve water and energy services in an equitable and economically efficient manner, while managing and reducing risks to all stakeholders. If a dam emerges from planning, risks to be managed include political, social, engineering, environmental, financial and economic risks, as well as the more specific risks to livelihood faced by displaced families and communities upstream and downstream of the dam.

Risk minimisation is important from many perspectives. In general, the overall financing costs of projects that rely partly or wholly on private sector financing sources may be reduced where risks are perceived to be lower. In most settings, reducing the risk of public rejection of a large infrastructure project can lead to lower cost of capital (ie lower interest rates on loans) or improved access to financing. Moreover, if lower cost options are identified than would otherwise be possible in weak or constrained planning processes, additional savings accrue. Such economic savings alone may more than cover the additional costs needed for more rigorous and participatory options assessments and planning processes.

In developing countries steps to improve planning, options assessment and stakeholder participation create additional financial challenges to governments. Developing countries and financial service providers will need to seek opportunities to develop mechanisms to cover the higher up-front costs of improved planning, and then cover these costs from subsequent savings in programme or project implementation – where risk reduction has led to lower financing costs. There are a number of means to achieve this, ranging from revolving sector-based development funds to license fees and project royalties.

The implications are also that traditional sources of financial support will need to become less tied to specific projects at early stages of planning and more sectoral in nature. This is particularly so if emphasis is placed on supporting projects that have emerged from integrated and multi-criteria planning and decision-making processes. This will require some adjustment in the lending practices of financial institutions that are based on strict economic criteria alone. Sector-lending programmes of the major multilateral financing agencies would need to recognise the increased cost of the up front planning and stakeholder participation processes. Similarly, the point where governments invite entry of the private sector and commercial financing would more logically be after the basic clearance of the projects in the initial options assessment stage. This can have substantial practical advantages to the private sector as well as government in terms of reducing risk and uncertainty and promoting efficient use of scarce financial resources overall.

Finally, it is important to note that institutional roles in planning may rapidly change as governments undertake economic liberalisation and regulatory reforms and expand the participation in planning. It is thus important in many jurisdictions to create or alter legal and regulatory provisions so as to support planning reforms and allow access to resources for meaningful participation.

4 Toward Improved Planning Approaches

4.1 Principles for Planning

Section 1 of the paper provides details on integrated water resource management from Agenda 21 (UNCED, 1993). The points are not repeated here, but do provide a valid basis for planning principles that have relatively universal acceptance. The Agenda 21 points have been reinforced by subsequent UN Agency reports and policy statements in the last few years. The most recent in March 2000, was the ministerial declaration signed in the Hague, which was part of the World Water Forum. The essence is captured in the box that follows.

The basic elements of integrated resource planning are relatively well known, though the application in practice is perhaps more difficult. Operationalisation challenges include data requirements, the need for sharing of information, and political support. In the context of the dams debate the underlying need and rational for pursuing integrated planning approaches is further enhanced.

Section 3 looks in more detail at how these concerns are being overcome and at the adaptation and application of integrated planning approaches at strategic, project and operational planning levels and in the different sectors.

Dams options can arise for consideration in power planning exercises or in water-related planning processes. The integration of water resource planning and power sector planning can be addressed through co-ordination of planning processes that are based on river systems and complementary groundwater and surface water resources (where applicable), and power planning processes that are not limited in geographic extent to river systems. However, a decision will be needed on whether overall strategic priority should in general be given to water resource planning. River planning and regulation should aim for water supply to meet basic needs for potable water and sanitation, for irrigation, and for other non-electricity uses, in a context of ecosystem and watershed protection. If hydropower can fit into the water resource planning and management framework and not unduly compromise other goals, there is no reason not to consider it. As suggested in Agenda 21, there may be reason to "plan and develop multi-purpose hydroelectric (dam) schemes, making sure that environmental concerns are duly taken into account" (UNCED, 1993). Clearly, this will be a concern in countries with untapped hydroelectric potential but few other indigenous energy resources to generate electricity for urban and industrial needs. While it depends on national policy, in general, the resource would be examined first from the water resource planning and management perspective, for it is, in general, easier to find substitutes for hydropower, and even for electricity, than for water supply.

There is some controversy over how to reconcile the concepts of integrated planning with the growing trend towards the so-called "deregulation" or "restructuring" of utilities or open markets, particularly in the power and water supply sectors. Full deregulation requires active markets that buy or sell assets or services based on current market prices. By its nature, deregulation discourages the consideration of economic inefficiencies such as environmental externalities, Demand Supply Management (DSM) programmes, and the low rates for residential customers that IRP introduces into the planning process. It also favours short-term profits that can be reinvested, over the long-term capital investments and planning required by IRP (EREN, 1999). For those reasons and others, there is a great deal of debate internationally over the topic of utility restructuring. Many issues remain unresolved, including "stranded investments" of public utilities, transmission access, rate protection for residential customers, and public attitude on the transfer and ownership of assets. These issues should be answered and understood by the public before embarking on a path to full deregulation.

The basic concept of IRP: to optimise the electricity system from a societal perspective or to provide energy services at lowest cost to society, is still valid, even in deregulation. Government still wants to achieve the best outcome for society through integrating demand and supply options for energy services. In competitive markets, where private investors participate, a legislative or regulatory framework that is based on the same considerations as integrated planning can still guide licensing and investment decisions. In developing countries, IRP in the broader sense is an appropriate tool to guide political and financial decisions considering the interests and needs of the population. Full deregulation of the electricity or water supply industry is unlikely to happen fast in developing countries due to too many competing demands on governments, and thus for many more years monopoly components of the industry will exist. During this time it is important that IRP guide the large investment decisions currently in the pipeline.

In all countries, large dams for hydropower are usually either public projects or highly regulated private projects, and it will always be appropriate to assess them against the likely alternatives linked to IRP processes for the water sector or basin. In countries with many potential hydropower sites and few fossil or other energy resources for grid-based generation (other than imported fuels), IRP-type processes are especially relevant in choosing among sites.

4.3 Multi-Criteria Analysis Methods

"Water resources issues and problems are characterised by multiple objectives, multiple criteria, multiple decision-makers, multiple uses, and multiple constituencies"

Source: (Kindler, 1990)

Limitations of the traditional project cost-benefit analysis (CBA) have gradually led to the adoption of multi-criteria techniques, particularly in planning processes that involve multi-attribute and impact undertakings such as dams. The relationship between MCA and CBA, which is also a means of coping with multiple conflicting goals, is sometimes raised as a question. The most common and practical approach is to represent CBA results as one criterion within a larger MCA framework.

MCA exercises are most often used at the options assessment stage for project selection but have further uses at decision-making points further down the project cycle. Most significantly, participation and transparency goals can be facilitated and operationalised through multi-criteria processes. In many respects, MCA processes become negotiating grounds to decide which options are to receive prominence, and provide a basis to move toward societal consensus on exploring those paths and options more fully.

The three steps of the MCA process (identifying and structuring criteria, evaluating options in terms of these criteria, and aggregating preferences across criteria) are in fact implicit in any decision-making, whether made explicit or not. The advantage of invoking formal MCA processes is precisely that they are made explicit. The criteria make explicit what issues were taken into consideration in coming to a decision. The evaluation of alternatives according to each criterion makes explicit the manner in which the different options or alternative policy scenarios are perceived to contribute towards the associated development goals. Finally, the aggregation process makes explicit the implicit value trade-offs that have been made. Once explicit, all three phases can be subject to public debate.

An associated issue is that of coherency in decision-making. Choice of criteria, evaluation of alternatives in terms of the criteria, and selection of importance weights are all subjective value judgements that cannot be verified objectively. What MCA does, however, is to impose a discipline on the planning process, which ensures a degree of coherency, in the sense of ensuring an internal logical consistency between the choices and value judgements that are made.

 

Facilitating Communication and Conflict Resolution

A feature of public sector planning and decision-making is often a breakdown in communication between different stakeholder interests. One group cannot understand why another is so close-minded and illogical that they cannot see what the first group perceives to be the "obviously" best strategy. It is probably true that many more conflicts are due to consideration of different sets of criteria, or to different trade-offs between them, or simply to a lack of trust in the decision-makers and perceptions of their motivations.

Criterion weights or value trees used in MCA techniques, especially those presented by different stakeholder groups, immediately give a picture of what the different groups deem to be important. The rank orderings of alternatives in terms of the criteria communicate a clear indication of the operational meaning of each criterion, and reasons for preferring one option to another. In the aggregation process, the importance attached to different criteria by different groups communicates their individual value judgements, and provides a means by which these can be discussed. Even if this cannot resolve the conflicts, the use of MCA may still assist in identifying policy scenarios that are robust in the sense of being sufficiently good on those criteria on which there is conflict, so that the conflict has minimal impact.

 

Decision Points Where MCA May Be Applied

Many separate decisions are taken both during and as a result of planning - whether it is strategic planning, project planning or operation planning. MCA processes and decision support tools may be usefully applied at the various decision points over the planning and project cycle. In practice MCA processes can range from very simple, clear processes to more major and complex planning exercises, depending on the application and circumstances, and the number and type of stakeholders.

A broad range of decision points in strategic planning, and dam-related project planning, and operational planning where MCA-type processes can be used, is shown in the following box. These are elaborated in Section 4 of the paper.

 

5 Enabling Conditions For Improved Planning

The practical application of integrated planning approaches and MCA techniques is faced with several challenges. Lack of financial and other means to obtain basic data and establish needed information systems are cited as the most common problems in developing economies. Lack of institutional capacity and the ability to put integrated planning concept into practice, and resistance by some groups against such a concrete consideration of, and trade-off among options are other barriers. For decision-makers and processes, bottlenecks in the IRP are the lack of specific information on the process, accessibility, consolidation, and enabling legislation. More fundamentally, political and legal direction is needed to create the needed blend of authority and autonomy for planning processes.

A general prerequisite is the existence of political government policies that encourage or require sector-level planning and provide it with a modicum of autonomy and resources. Secondly, there needs to be a formal recognised basis for participation in planning and the legitimate roles of the different stakeholder groups. This generally requires regulations and laws to ensure that responsibilities are clearly set out and understood, and that the means for compliance verification and monitoring are in place.

Additionally, particular sets of enabling conditions for good planning practice at the sector and inter-sector level are:

• capacity building for stakeholder involvement;
• capacity building for technical support;
• adapting government planning strategies to reforms in irrigation and water supply;
• adapting government planning strategies to power sector reform;
• institutional strategies for cross-sector integration;
• structuring development assistance to support country-driven planning processes.

Fostering international and regional co-ordination on river basin planning and management, and fostering international co-ordination on energy planning and management are also important issues.

Capacity building for stakeholder involvement. In addition to involving a range of relevant government agencies in planning, it will generally be important to involve stakeholders of the following types (adapted from ADB, 1998):

• water users, individually or by group;
• electricity users, individually or by group;
• groups that have been under-represented, such as urban or rural poor;
• groups that may be adversely affected by projects, such as those who may be displaced;
• private sector sources of capital;
• private sector sources of technology and expertise;
• academic, professional, or research personnel with applicable expertise; and
• NGOs with environmental, community, cultural, or other purposes.

There are great differences in the type and level of risks faced by the different stakeholders in a planning process or project. For some it may be a corporate responsibility and mainly a financial consideration, while for others it may be an issue of livelihood. There are also enormous differences amongst stakeholder groups in terms of financial and cultural resources they can bring to the planning process. This implies that resources to support key stakeholders must be considered an integral part of the funding base for planning. Assisting groups of local, poor, or minority stakeholders is a legitimate and potentially valuable step for governments to include in planning processes. Institutional strengthening helps make the participation of groups meaningful to them and of value to the process as a whole. Groups that are organised and adequately financed are better able to participate. In particular, effective groups with significant community support are more able to represent their communities (and be accepted as legitimate representatives by other stakeholders) during negotiations over difficult issues that arise in considering dams options — issues like displacement, resettlement, and compensation.

Capacity building for technical support. IRP uses more diverse analytical tools than traditional supply-side planning (which has the single objective of meeting demand for water or energy). Tools may include modelling and scenario analyses, statistical techniques, simulation, and MCA. To apply and integrate this variety of tools, planning requires multi-disciplinary expertise such as experience in water engineering and modelling, water supply planning, natural resource valuation, community-based consulting and capacity building, and facilitation and mediation. Professional staff at planning agencies, water authorities, energy utilities, or other entities responsible for preparing resource plans may need training in the planning tools and techniques. Additionally, training in how to establish and manage planning processes may need to be provided for executive staff from the government ministries or commissions leading resource planning.

Adapting government planning strategies to reforms in irrigation and water supply. The trend in the provision of water related services such as irrigation and supply is toward moving management to the lowest practicable level while gradually improving the efficiency of pricing, instituting user charges where they are absent. While this may mean privatisation or devolution at the level of local distribution operations, for the most part governments retain ownership of supply, transmission, treatment, and major distribution systems. Thus, the privatisation trend is much weaker for the power sector in comparison with other sectors in many countries. In water, the challenge for governments is to disentangle their vested interests as owners from their critical roles in (1) planning for resource management and (2) enhancing regulation on a foundation of clear water rights while assuring fair market competition with consumer protection.

Adapting government planning strategies to power sector reform. The global trend of power sector reform has profound implications for dams-related planning. The reform process transfers investment risk to the private sector. It improves access to electricity markets for private power producers. These results of reform tend to favour technologies that are lower in capital cost and have shorter gestation periods. Thus, gas turbine-based technologies have thrived, at the expense of large, capital-intensive technologies, such as hydroelectric dams, which historically relied heavily on the involvement of government institutions and public funding. This result implies that consideration of large dams for power is to be initiated by governments, which should use multi-objective planning approaches resulting in projects that can be financed because they have been tested against alternatives and because they are socially and politically acceptable. The reform process also implies a shift in integrated electric resource planning to the governmental level where it can be used to establish benchmark plans for assessing overall power sector development and for formulating market regulations to foster sustainability objectives.

Institutional strategies for cross-sector integration: Countries often have master plan frameworks in individual water-related sectors. Issues raised in this review suggest that key questions include how to evolve master plans toward more dynamic and adaptive resource planning; how to promote cross-sector co-ordination or, by instituting river basin or watershed planning, integration; and, in particular, how to integrate water related planning and power sector planning.

Integration can be addressed through co-ordination processes, and analytical procedures, and over-arching priorities. In addition, there should (in each country) be a national water body that brings together government ministries whose duties impinge upon water use. Such a body provides one means of co-ordinating national strategic directions for water and energy and can help assure that hydropower development schemes are consistent with sustainable water resource management.

Structuring development assistance to support country-driven planning processes. The relationship between developing countries and donor countries can have strong implications for planning processes in the latter. Donor agencies have often focused on specific projects, which can tend to drive planning (rather than planning driving projects as is urged here). Donor agencies exert a strong influence on planning by recipients, arising from the conditions for financing and from the agencies’ internal evaluation processes. Moreover, there is an array of differing guidelines and standards. These influences can conflict with negotiated planning decisions within the country. Conversely, donors may require an assessment process that is transparent, participatory, and environmentally thorough as a condition of a specific project grant or loan, yet this requirement may promote discrete compliance steps by the recipient country more than the institutionalisation of ongoing sectoral planning.

In this context there is a promising movement under way at some bilateral and multilateral finance institutions — for example, the World Bank and the Asian Development Bank — to shift from a project-by-project mode toward more strategic approaches. The latter can better support the development of sustainable, country-driven, integrated planning processes.

It is believed that the planning approaches and practices summarised in this paper and in the Annexes, and in broad terms advocated, can more effectively encompass the competing perspectives and values at play in societies as they relate to the dams debate. The text of this paper includes evidence indicative of the possibilities, based on consideration of recent planning cases that have effectively used a number of the critical elements of multi objective integrated resource planning.