Large dams costs too much

ThienNhien.Net - New research given by the University of Oxford (UK) states that three-quarters of large dam projects that the research team surveyed face situation of over spending with actual ...

ThienNhien.Net - New research given by the University of Oxford (UK) states that three-quarters of large dam projects that the research team surveyed face situation of over spending with actual expenditure of 96% higher than planned budget.

According to the team, apart from the offset cost for social and environmental losses, only actual payments for the construction of large dams was too high to hit in exchange for benefits brought.

The report makes an analysis in all 245 major dam projects built in 65 countries during 1934-2007 which is the period with good keeping of full documentation on dams.

The materials were collected from resources of the World Bank (WB), Asian Development Bank (ADB), the World Commission on Dams (WCD), United States Army Corps of Engineers (USACE), Tennessee Valley Authority (TVA) and the U.S. Bureau of Reclamation (USBR).

The study shows that the over spending state in the construction of large dams is caused by both objective and subjective reasons. The objective reason is identified as particular feature of location for dam construction as unfavorable geology, fluctuated material price and exchange rate differences in the developing countries.

Subjective reasons is the over optimism of dam developers on project completion speed and wrong cost estimate on purpose to reach an approval for the projects.

Most of the world's large dams are facing the high cost overruns (Artwork: HaiHoi.com)

The researchers acknowledge that the large dams in North America don’t have to face the same problems of investors and dam builders in developing countries. Because materials for dam construction in North America are domestic, without affected by fluctuations in exchange rates or global supply chain. However, the dams inevitably fell in over-spending condition, normally due to delay in project progress.

In another research result, over-spending proportion in large dam projects is higher than almost large-scale projects in other areas. To demonstrate that, the group offers some typical numbers such as: expected overrun rate of geothermal power projects is 6%; 20% for the roads; 34% for bridges and tunnels; 45% for the railway works. The only nuclear power plants have occurred over-spending status up to 207%.

The above research results “is certainly not intended to boycott hydropower but to oppose mistakes in the construction of large dams" – stressed Mr. Bent Flyvbjerg, a professor at Saïd Business School, Oxford University.

In spite of an agreement that all applied assessment methods are reliable, Mr. Keith Ferguson, President of the American Association on Dam said that research scope was quite narrow. He explained: "The study only focused on clarifying the past challenges of the dam industry on construction cost estimation. Meanwhile the fact that the challenge has been solved in huge attempt by the U.S. and many countries through a number of measures as an addition of risk and uncertainty in the cost modeling for more accurate estimate of dam construction cost".

In the standpoint of the interests of poor communities lacking electricity, the International Energy Agency (IEA) proposes to implement renewable energy projects and the construction of small grid which is enough to meet the power needs for a small community.

In a consensus, Mr. Peter Bosshard, policy director of International Rivers (IR) stated that "The expansion of the national power grid to provide electricity to the poor rural areas in Africa and South Asia is not cost-effective. Regarding disinterested investing perspective, perhaps, the future of wind power, photovoltaic power and small hydro power will be much more promising."

According resistance / Vanhien.vn, 03 / 2014

Translator: Phuong Linh - GreenID