The big issue

The Three Gorges dam in Hubei Province, China is scheduled for completion in 2009 at an estimated cost of US$50B. It took more than 70 years, since it was first proposed in 1921 by President Sun Yatsen, for construction to begin. By the time construction did commence in 1993, some 50 years of planning and design and 20 years of vigorous debate and opposition on environmental and resettlement issues, both within the international community and within the Chinese leadership itself, had occurred over the dam project.

Internationally, the debate focussed on environmental issues, as well as questions about the dam’s feasibility. Domestically, the Chinese engineers and political leaders involved with decision-making concerning the dam were most concerned with the resettlement issue, the environmental impact and funding. Since the Chinese wanted to attract international investment and funding for the dam, they were more responsive than they might otherwise have been to the serious environmental issues raised by the international community.

Apart from being the most expensive dam ever built, the Three Gorges will be amongst the highest, have one of the longest reservoirs, and will produce the most electricity. It will also require the resettlement of over one million people from the impoundment area.

Apart from the usual list of environmental impacts resulting from building a dam, it is the sheer magnitude of the resettlement issue that has made the decision to build the Three Gorges one of the most contentious ever.

Setting the stage

The major problems faced in planning and developing large dams are not strictly environmental, technical or economic. Rather, they are problems of governance. The famous definition of politics (who gets what, when and how), captures the problems facing proponents of water development in general, and dam development in particular. We fool ourselves if we believe that the needs of burgeoning populations can be met without environmental and economic disruption for some ecosystems and segments of society. The history of the development of resources, growth of the economy and industrialisation is replete with many horror stories of damaged environments, uprooted populations and inequitable distribution of the benefits. At the beginning of the twenty-first century, however, we believe that we should be able to mitigate the worst of these excesses and have economic and social development take a more gentle path.

It is important to recall that dams are about development. Nobody builds a dam just for the sake of building it. Development, if pursued either by a government or a private party, aims to provide benefits to some groups in society in such a way that the benefits exceed the costs. Simple economic theory embedded in the US Flood Control Act of 1936, states that the ‘benefits to whom they shall accrue must exceed the costs.’ This works fine if everyone experiences the same incidence of benefits and costs, but an unfortunate feature of dam projects is that generally some people receive most of the benefits and others pay most of the costs.

Typically, urban dwellers reap the benefits of reduced electricity costs, farmers gain benefits from increased irrigation, cities and industries benefit from improved water supplies, but the persons living in the areas to be flooded receive little compensation for the loss of their livelihoods. According to a rational economic point of view, there should be fairly simple ways of arranging for compensation to be paid by the beneficiaries to the affected populations. However, politically it is often impossible to arrange for these transfers because of regional, ethnic, and social disparities among the affected parties. Often it is simply that no mechanisms exist to facilitate such compensations.

Moreover, there are not only economic benefits and costs involved — major social and environmental costs also accompany such large dam projects. These are classic externalities, which are difficult to measure on a balance sheet because they tend to be long-term, and because they lack a market price. As such, they are outside of the realm of traditional economic assessment and beyond the reach of many governments’ abilities to regulate.

Resettlement costs

There are four major areas of concern with large dams: environment, economics, dam safety, and resettlement. While the resettlement issue has dominated the current debate, the other three aspects can not be forgotten as they each contribute directly to the seriousness of the resettlement issue. For example, the economics of the project will determine whether or not the costs of resettlement can be justified; the deterioration of the environment will affect the lives of the resettlees possibly more than it will the lives of the other beneficiary populations; and the safety of the more than 40,000 large dams and 800,000 small dams already built worldwide could affect the entire populations of the regions includ-ing the former resettled populations.

Resettlement, or as it is often referred to, involuntary resettlement, has been the flash point in recent years over the future viability of constructing new dams. It has been the subject of several studies by the major players in the debate, with those of the World Bank and the International Union for the Concern of Nature/World Conservation Union (IUCN) being the most prominent. According to the World Bank, out of a sample of 50 (from a total of over 400 World Bank financed large dam projects), only five were regarded as unacceptable under their old guidelines on resettlement and 13 would have been unacceptable, under the new guidelines on environment adopted in 1986.

This is a remarkable record considering that the vast majority of the projects were started well before the World Bank ever thought of environmental guidelines. Only half of the sample of 50, however, is now considered to have had satisfactory resettlement of the populations, with 540,000 people being subjected to satisfactory resettlement programs and 280,000 to unsatisfactory ones. This clearly is not a stellar record. The Bank concludes that satisfactory resettlement schemes costing between three and five times the GNP per capita of the country seem to be adequate. Those cases where less than two times the GNP/capita was spent on resettlement experienced serious difficulty. The World Bank reports that none of the projects with a ratio of per capita resettlement costs to per capita GNP of 3.5 or higher has reported resettlement difficulties. In fact it singles out China as being by far the best performer. Figures reported in the literature for actual expenditures on resettlement programmes for specific projects, however, vary dramatically: per family costs ranging from US$500 at Upper Krishna (India) to US$24,000 at Shuikou (China) to an incredible US$240,000 at Itaparica (Brazil), have been reported.

Criticism

Despite the criticism levelled by environmentalists, both in China and abroad, and opposition from the World Bank and major governments such as the US, the Chinese government has gone ahead with the construction of the Three Gorges dam. Resettlement of 1.2M people appears to be the major complaint. China is, however, the leader amongst third world countries, and even among first world countries, in dealing creatively with resettlement. With essentially no domestic NGOs China has been able to forge an approach to resettlement that is unique among developing countries. Indeed, neighbouring India with a multitude of NGOs, seems to have one of the worst records with regard to resettlement.

According to one senior World Bank official, the reason that the Chinese seem to be so successful is that they view resettlement as part of the development process itself and not as a welfare entitlement. Long before construction was started on the dam itself, the Chinese were busy preparing lands, including planting orchards and constructing housing, villages and towns outside of the flooded areas for the people who would ultimately be relocated. This has to be compared with resettlement in most other countries which is carried out in a haphazard way even until the last moment, often with people being evacuated from the rapidly rising waters by helicopters.

If one was to complain about the Three Gorges dam, one should focus on the lost cultural heritage sites and the impacts on the aquatic ecosystem, not on resettlement of the population.