Banking on better business16 July 2001
The World Bank believes the World Commission on Dams’ project guidelines will be an excellent reference point for the industry when used sensibly. Suzanne Pritchard met with senior Bank representatives to find out more
The day of the blue ribbon panel is over and the day of civil society engagement is just beginning, says Ian Johnson, vice president of the World Bank’s environmentally and socially sustainable development unit. Reflecting on the work of the World Commission on Dams (WCD) and how it has attempted to pull together a wide ranging group of stakeholders in the dams business, he adds: ‘We can no longer create groups of experts who pontificate and simply say “here’s the answer”.
‘The world out there nowadays is more interconnected than ever before: a local issue is globalised in 24 hours. You cannot move forward in this kind of business without due diligence on social, environmental and ecological responsibility. Anyone who believes otherwise is thinking 30 years out of date.’
Speaking at his Washington, DC office in the US, Johnson explained what the Bank’s response to the WCD’s report has been. ‘We’ve issued a response on our website which is very supportive of what the WCD has attempted to do: produce a report which is a useful reference point to be used sensibly, dependent on the nature of issues and the specific situation.’ Johnson also explained that the basis of the Bank’s official response will be discussed by its board, and that it is also working on developing an action plan to look more closely at water resource issues in general, not just dams. This will be announced towards the end of the year.
So what has been the reaction to the Bank’s response so far? ‘We’ve had a range of responses. The NGO community is only one group, there are also governments, bank staff and private companies to consider. It obviously depends on who you talk to but there has been a broad range of views.’
General responses from the US seem to reflect Johnson’s own opinions. ‘This is an excellent reference point if used in a judicious and sensible way. If it is used in a way that is heavy-handed or without government support then it will not work,’ warns Johnson. ‘We have to use it in an appropriate setting as a reference against which we can look at the various recommendations. In any one given situation it is highly unlikely that all recommendations will apply. We just have to be sensible.’
‘We’re not completely sure on how the industry will use the report yet, and so far one of the most detailed explorations of this has been done by the South African government,’ says John Briscoe, senior water advisor at the World Bank.
The Department of Water Affairs and Forestry took the guidelines and looked at a project near Cape Town which has been the subject of some controversial debate. The guidelines were described as being useful to work through systematically to determine their relevance, and were used to inform the thinking and decision-making process. (See Factfile below for more details).
‘The good thing is that the report and its guidelines forces you into asking the right questions,’ says Johnson.
With the Bank proudly stating that it has some of the toughest environmental and social standards on the book, will it look more favourably upon potential borrowers who state they will adhere to WCD’s recommendations? ‘To be honest we’re a relatively small player in dams nowadays and the Bank has no plans to offer incentives in this way,’ Johnson adds.
‘WCD will not be the sole driving force for change but what I do envisage over time is that the power side of the industry is unlikely to grow, and will remain fairly constant. Furthermore, over the next 20 to 30 years, flooding and concerns over climate change will prompt a growth in dams for flood control. But that is purely speculative at this point.’
It is all dependent on each country, its own priorities and their ability to mobilise private financial resources versus public resources. It will vary from country to country and, as Johnson adds, one shoe will not fit all.
‘What will come out of this report,’ says Alessandro Palmieri, a senior dams specialist at the Bank, ‘is the importance of existing dams and reservoirs. There will be greater emphasis on making better use of existing facilities by squeezing out more efficiency and conserving storage through sediment management. It can be hard for the private sector to put money in for this kind of action but this is where financial institutions, such as the World Bank, can play a role.’
The whole issue of rehabilitation and efficiency gains is a very good point, Johnson adds. ‘It can save an awful lot of money if we say it is possible to wait five or so years to build a plant and start rehabilitating what we’ve got. By looking upstream in a river basin you can consider all the different options and find a lot more in the power sector. Delaying building plants by several years, and looking at what efficiency you can squeeze out of existing systems, can save you a lot of money.’
So does this means that the Bank’s thinking will tend to lean more towards looking at existing dams before considering new projects? ‘We don’t have, nor want to have, a blanket policy for anything like that,’ says Johnson. ‘It depends on the particular circumstances and, if it makes sense, the answer is yes. We have a duty to carry out due diligence on the economics and financing of projects, as well as their social and environmental impacts. We have to take a look at the least costly way to do whatever we are trying to achieve, be it flood control or electricity production.’
In some sense, the Bank does already have a systems-wide approach to dam projects and water resources in general. ‘Water is getting more and more costly, and scarce in certain areas,’ says Johnson. ‘It is our duty to look at it in a more comprehensive way, taking account of transboundary and multi-country issues.
‘The Bank is not looking more broadly project by project but is looking at projects in a macro and country context. Such due diligence work will continue and will intensify due to competing demands for water and the increasing cost of the next generation of water resources projects. A systems-wide approach is not a new issue but it is becoming increasingly important.’
Palmieri explains the importance of also considering projects and countries individually. ‘You can’t really go to countries like Nepal where they have hardly exploited any hydro, and tell them to improve conservation of resources they have already got – they have nothing to conserve,’ he said. ‘But this is not the case in all countries.’
Joining the discussion on such areas, Briscoe adds: ‘Globally, some of the smaller and poorer countries like Nepal and Laos – which have water, gravity and not much else – have difficulty in mobilising private financing. This will not be a huge portfolio for us but we will probably be interested more through guarantees and dealing with environmental and social issues. This is a very important constituency for the Bank.’
Thinking about the benefits that hydro power dams can bring to countries directed discussions towards issues which the WCD report has overlooked: specifically the benefits of dams. ‘Let’s look at projects such as Aswan, Itaipu, Grand Coulee and Hoover dams,’ Briscoe says. ‘These are all projects which were built to transform countries: the northwest US economy is built on hydro power. So, to see these projects just as schemes which were supposed to deliver a certain amount of megawatts when built, is not the right approach to take.’
Another issue arising from WCD’s report was the question of sovereignty. ‘Our borrowers believed that WCD rather downgrades the issue of sovereignty,’ says Briscoe. ‘In reality, you do have to look at sovereignty. Where the Bank has had success in transboundary issues investment has been a part of making countries operate together. Be it in the Baltic Sea, the Indus or Lesotho Highlands, it is through the generation of benefits and shared infrastructure that people come together and operate. In many cases dams will be part of that infrastructure.’
‘I’ve no doubt that over the next 30 years transboundary riparian issues will become more important,’ Johnson adds. ‘We’ve already seen this in Turkey where we’ve worked on the Euphrates and Tigris, as well as the Nile Basin. And I suspect that this will increase.’
The Bank says that it is already doing much of what the WCD recommends. ‘We probably have the best environmental and social policies of any institution the world,’ says Johnson. ‘And the WCD did give us credit for that. We’re up there on a pedestal, which can be both a plus and minus at times. I personally think that we should get much more credit than we ever do. We have some tough policies and, as the WCD said at the beginning of the whole process, the World Bank is a benchmark against which such policies should be measured.’
However, various NGOs (including the Berne Declaration and the South Asia Network on Dams, Rivers and People) have protested against, what they claim is, the Bank’s refusal to accept some of WCD’s recommendations.
In its website response to the report, the Bank stated that there is no major difference between WCD’s recommendations and its own operational policies on environmental assessment, natural habitats, cultural resources and the safety of dams. However, differences exist between its resettlement and indigenous peoples policies and, especially, the processes for deciding on whether or not to build a dam. Johnson expanded on these statements.
‘We believe that participation and consultation is absolute,’ he said. ‘You have got to have local participation and consultation. It helps in so many ways with the whole project, from project design to facilitating resettlement in a more sensible and rational manner.’
Out of 305 resettlement projects the bank is working on, only 1% of these involve dams. Most of the non-dam projects are small, community level schemes, such as slum clearance. WCD’s recommendations on resettlement are geared more to large infrastructure.
After discussion with the Bank’s board and borrowers, it was decided that resettlement and the rights of indigenous people are not dam issues, they are issues where any infrastructure can cause resettlement. ‘So we said no – we don’t want a law on resettlement for dams,’ says Briscoe.
The main difference between the Bank’s and WCD’s policy was that the Commission gives primacy to communities, in a sense giving veto power. ‘If a government says to us we are willing to abide by this, we wouldn’t have a problem,’ Briscoe says.
Johnson is still keen to add that the WCD process should be given credit for creating a platform where people with very diverse views can talk to one another. ‘WCD has been an experiment,’ he says, ‘and often we are not given credit for things that we have tried and experimented with. The Commission’s great success has been getting people, who are typically antagonistic towards one another, to at least find a platform for professional discussion. They were able to talk in a reasonable and non-confrontational manner.’
Although he does believe it was a successful endeavour in many respects, Johnson does have some regrets about how the WCD process developed. ‘I wish in many ways that it had taken more time towards the end for broad-based consultation, and I regret that it did not happen.
‘One lesson that we have all come to learn is that consultation takes time,’ he continues. ‘You have to build in plenty of time for consultation with all stakeholders and I would have preferred to have seen this stretched out in the later stages.’
The WCD process is a prime example of how the global dams industry, and the environment in which it operates, has changed in recent years. Briscoe and Johnson firmly believe that it is no longer acceptable to continue with ‘old’ ways of doing business, but warn that newer alternatives will not always be the easy way out.
‘These days, the notion that a group of people can sit and make rules that everyone else will follow can no longer exist,’ says Briscoe. ‘Consultation and participation are very messy, difficult and confrontational, but that is what the nature of the debate is all about.’
‘It has to be remembered that this report is a valuable reference point that asks the right questions,’ Johnson adds. ‘Having said that, it has to be used sensibly to gain maximum benefits.’
|South African government uses WCD checklist...|
|The proposed 60m high Sukifraam dam on the Berg river in South Africa will help to increase Cape Town’s water demand from 350M m3 (1997 figures) to 600M m3 in 2011. Six months after feasibility studies, public consultations and appeals were carried out, and just as the project was being authorised, the WCD report was launched in November 2000. The Department of Water Affairs and Forestry (DWAF) decided to review its project against the report’s guidelines for good practice where relevant. The general findings were that Sukifraam complies with the guidelines in the planning stage. With the design, implementation and operational phases it will ‘substantially meet the guidelines in the future’. DWAF listed the strengths of the guidelines as promoting: •Good planning and decision-making. •Integrity and accountability. •A holistic perspective. Difficulties were noted as being open to interpretation; extensive detail; overlaps; lack of legal context; relevance to particular projects; and addressing existing dams. Director general of DWAF, Mike Muller, said the guidelines should be emphasised as a checklist of best practice and not a list for compliance, as it is not considered appropriate for the latter. A guideline manual for each phase of a project would also be useful.|