The HSAF process - view from an NGO

19 June 2009



Peter Bosshard of International Rivers argues that the industry-led HSAF process falls behind current international standards, and may create new conflicts in the hydro power sector


Large dams that did not consider the interests of affected communities and the environment have impoverished affected communities and degraded ecosystems around the world. Civil society campaigns against such projects have often caused massive delays and cost overruns and have sunk large-scale investments.

The World Bank’s safeguard policies, the Equator Principles and the Common Approaches of export credit agencies to the environment were a response to the lack of standards for infrastructure projects. Even if they vary in their details, these policies create a degree of predictability for financiers and investors, and make it easier for governments to reconcile their social, environmental and economic interests and obligations.

The World Commission on Dams (WCD) has prepared the most comprehensive guidelines for planning and implementing water and energy projects. The WCD framework espouses an approach in which all actors – including dam-affected communities – have enforceable rights. It turned affected communities from being recipients or victims of development projects into actors at the negotiating table.

A new approach

The European Commission and several private banks have adopted the WCD framework in its entirety. Many other financial institutions, governments and industry associations have endorsed the Commission’s strategic priorities, but not the more specific policy principles. The international-hydropower-association (iha) has expressed concern “about the practicality of all affected people being part of the negotiation process”.

In 2007 IHA and a number of other organizations created the Hydropower Sustainability Assessment Forum (HSAF) to come up with a new approach (see the article on p40). The official goal of this forum is to “develop a broadly endorsed sustainability assessment tool to measure and guide performance in the hydro power sector” by the end of 2009.

HSAF is currently preparing a new Sustainability Assessment Protocol with guidelines on more than 80 aspects of hydro projects. Each of these aspects will be elaborated through a set of criteria or attributes. The future protocol will allow scoring the performance of projects along these attributes. The industry hopes that it will be able to attract concessional finance and carbon credits for projects which pass an HSAF score card.

Lack of clear standards

In spite of past experiences and the expectations of financiers, investors and many governments, the new HSAF approach does not include any minimum standards for hydroelectric projects. According to the Forum, the future protocol “will set out a spectrum of performance on key hydro power sustainability issues without specifying guidelines or minimum standards on acceptable hydro power sustainability performance”.

HSAF summarized its proposed approach in a Key Components Document in January 2009. Its approach builds on the voluntary efforts of

developers to manage problems, rather than binding standards that could avoid problems from the outset. The following examples illustrate the problems and limitations of this approach:

• HSAF’s Key Components Document does not identify compliance with existing laws and regulations as a minimum requirement of sustainable hydro power projects. Instead, it proposes to score the degree of compliance, using attributes such as the “likelihood of compliance with regional and national plans” and the “degree of conformance with relevant international protocols and conventions”.

• The document does not require that new projects conform with international human rights norms, and fails to address the human rights situation in the host countries of projects. Its proposed scoring method only addresses the risks to investors, and not to affected communities (for example in the form of exacerbated repression).

• Instead of recognizing indigenous peoples’ right to free, prior informed consent, the document proposes to score “understanding the legal rights as embedded in national and international law”. This approach falls behind international norms and national legislation on the subject.

• The HSAF document does not require International Competitive Bidding (ICB) for large hydro projects, but merely proposes to measure attributes such as the “quality of the bidding documents, including addressing anti-bribery issues”. HSAF thus falls behind the procurement policies of international financial institutions, which prescribe ICB as a mandatory tool of combating bribery.

• The document does not recognize the right of affected people to access key project information, but instead proposes to score attributes such as the “quality of the project communication strategy”. This approach falls behind the current information policies of most multilateral development banks.

• The document does not define labor rights (such as the right to unionize) which must be respected in project construction. It instead proposes to score attributes such as the “quality of the labor management system”.

• The Key Components Document does not stipulate any ecological no-go areas for dam building such as national parks, World Heritage Sites or Ramsar sites. It merely proposes to measure attributes such as the “quality of plans to manage for biodiversity and conservation objectives”. This approach falls behind the current policies of international financial institutions.

• The document does not require that displacement of affected people be avoided. It does not prescribe land-for-land compensation for displaced people, or any other minimum compensation. It instead proposes to measure the “degree of change in living standard of directly affected stakeholders” (without indicating any timeframe) and the “level of compliance with resettlement legislation and standards requirement” (without identifying any standards).

• The HSAF document does not recognize traditional land rights, which could dispossess numerous indigenous communities affected by dam projects. It also fails to address the large population groups (such as downstream communities) which are not displaced but lose access to common resources such as fisheries, floodplains and forests.

• Although many dams are being built in earthquake-prone areas, the document does not consider the risks of reservoir-induced seismicity.

HSAF subjected the Key Components Document to a first phase of public consultation in January and February 2009. A recurrent theme in the reactions by private banks, donor governments and civil society organizations was that an assessment tool would not be useful unless it defined clear minimum standards for hydro power projects.

The NGOs argue that HSAF is not the appropriate body for developing new standards, but that any new assessment tool needs to incorporate the social and environmental standards which have already been established.

However, in April the HSAF members confirmed that their future protocol will not include any minimum standards. The various aspects in the protocol will “not state a requirement”, and will “not specify a level of acceptability”.

The problem of scoring

The HSAF protocol will include a long list of criteria (or attributes) according to which the performance of hydro power projects can be scored. HSAF believes that a rating method for hydro power projects will encourage good practice in the industry.

It is in the nature of scorecards (as compared to minimum standards that must be fulfilled) that low scores in certain aspects can be offset by higher scores in others. This is particularly relevant in the case of the HSAF protocol, where a few specific key criteria may be overtaken by vague, less important attributes.

The HSAF approach would allow projects that violate human rights, impoverish thousands of people or destroy important ecosystems but had good economics or first-class construction and safety management plans to be rated as sustainable. This ignores the basic principle that social, environmental and economic sustainability can not be traded in against each other.

The HSAF members emphasize that they have not yet settled on a specific scoring method. In principle, the Forum could develop a rating system that does not aggregate the performance of projects on the protocol’s approximately 80 aspects, but score project performance along all different aspects separately. This would however make overall assessments very difficult.

In the Key Components Document, HSAF asserts that the future protocol will rely “on objective evidence to support the score, that is, evidence that is factual, reproducible, objective and verifiable”. This will be a basic requirement of an operational rating system.

The HSAF document illustrates a potential scoring method with an example from IHA’s existing Sustainability Assessment Protocol. This protocol awards the top score for the biodiversity aspect to projects that have “adequate and suitable plans for understanding of relevant catchment, in-reservoir, and downstream biodiversity issues”. In projects such as the Nam Theun 2 Dam in Laos, there has often been strong public disagreement regarding whether the proposed environmental management plans were “adequate and suitable”. The proposed method does not offer any objective criteria that could resolve such disagreements.

The examples quoted in the critique above illustrate that most of the attributes that HSAF has so far presented are qualitative and subjective. Attributes such as the “likelihood of compliance with regional plans” or the “quality of the labor management system” are not factual, reproducible, objective and verifiable. Having to deal with hundreds of vague and qualitative attributes for 80 different aspects may well be more cumbersome than following 26 WCD recommendations.

Affected people

HSAF seems to believe that sustainability can be achieved through preparing a host of detailed assessments rather than by recognising the rights of dam-affected communities – dam affected people and Southern civil society groups are not represented at the HSAF negotiating table.

The Forum started a belated consultation process in January halfway through the HSAF process. A second consultation phase will follow from August through October, near the end of the process. This is too late to allow effective participation. If HSAF is seeking “broad endorsement” for a future protocol, its current process and its approach are non-starters. They will not bring about the clarity and reliability which dam financiers and investors are seeking, and will increase conflict in the hydro power sector.

Civil society groups from the North and South continue to be interested in working with governments and the dam industry to adapt the WCD framework to national contexts, and to implement it in practical planning processes and projects. Civil society will however not accept an approach that I believe falls behind generally acknowledged international standards.

Peter Bosshard, Policy Director, International Rivers, [email protected]




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