Study suggests large dams are not economically viable

12 March 2014

A new study by the University of Oxford's Blavatnik School of Government and Said Business School has suggested that large dams in a vast majority of cases are not economically viable, with construction costs on average +90% higher than their budgets at the time of approval, in real terms.

Published in Energy Policy Journal, the study - Should we build more large dams? The actual costs of hydropower megaproject development - is based on data from 245 large dams in 65 different countries, including Brazil, China, Ethiopia, Indonesia, and Pakistan. The study says that the magnitude of cost overruns has not declined over time, and cites examples including Itaipu dam and Belo Monte in Brazil.

Costs aside, the study also says mega-dams have long construction periods - 8.2 years on average and often more than 10 years, which can leave projects vulnerable to currency volatility, hyperinflation, political tensions, swings in water availability and electricity prices.

Report co-author Prof Bent Flyvberg says the research shows that as a general rule of thumb, many smaller, more flexible projects that can be built and go online quicker, and are more easily adapted to social and environmental concerns, are preferable to mega-dam projects and warns developing countries against embarking on major dam construction.

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Photo: The 14GW Itaipu dam in Brazil


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