Can Hydro-reservoirs in Tropical Moist Forests be ...

Can Hydro-reservoirs in Tropical Moist Forests be Environmentally Sustainable? by ROBERT J.A. GOODLAND,

PhD (McGill) Environment Department, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, ANASTACIO JURAS, PhD (Sao Paulo) Environment Department, Eletronorte, Brasilia DE, Brazil, &

RAJENDRA PACHAURI, PhD (North Carolina State) President, International Power Engineering Society. Tata Research Institute, New Delhi, India.

T

o observers such as ourselves, society, in an increasing number of tropical forest-owning countries, seems to have become polarized into two extremes: 'for' and 'against' big hydroprojects.* The media inform us about opponents brandishing machetes at confrontations with power engineers in Amazonia, thousands of demonstrators opposing dams in several countries, hundreds of thousands of signatures on petitions to the United Nations being received by the Secretary-General, and even an international celebrity, Baba Amte, starving himself to death on the banks of the Narmada River in India. One government is alleged to have fallen partly because of a hydroproject proposal for a valuable southern rain-forest, and several projects slated for tropical forest areas have been cancelled or indefinitely postponed partly or entirely on environmental grounds.t This tropical forest-dam controversy is far more important than its part in just helping the power utilities to win consensus and defuse polarization would suggest, for we are concerned really with global sustainability.§ One of the most effective ways to achieve sustainability is to accelerate the transition to renewable energy, of which hydropower should be a substantial part. We postpone to another occasion the debate between large vs small projects. Meanwhile we are certain that the world cannot afford 'business as usual'. This is doubly true for big dams: there is not enough capital available at affordable cost to meet projected demand for power (World Bank, 1989/?; Imran & Barnes, 1990; Moore & Smith, 1990).

* The most comprehensive documentation of this polarization is Goldsmith & Hildyard's three-volumes opus (1985-91) and Williams (1991). 1 Recent costly dam-fights, mainly over environmental issues, include: India's 240 MW Silent Valley hydroproject in Kerala's remnant rain-forest which was cancelled in 1980; Thailands' 1986 Nam Choan: 2000 MW lost after the feasibility-study stage; Thailand's 1991 Pak Mun: dam relocated and dam height lowered, delayed but now proceeding; Brazil's 1988 Babaquara: 6000 MW lost, due to campaign by rock singer 'Sting'; India's Narmada: 5years' delay after feasibility-study as new investigation (1991—2) is awaited; Australia's 180 MW Franklin River in Tasmania's World Heritage Rain Forest was shelved In 1983 (Paiwa, 1977, 1982; Rosa etal. 1988; Santos &Andrade, 1988; Commissao Pro-Indio c. 1989; Rosa, 1989; Margulis, 1990).

The polarization for and against hydropower seems most extreme in countries with tropical forests. This is understandable because tropical forests are often associated with major untouched rivers, and are the world's richest source of biodiversity. Such countries with tropical forests exist in Latin America, Africa, and Asia. So this is very much a global debate, and is not restricted to any one or two countries. Both poles could be perceived as adopting extreme positions and being unwilling to explore any middle ground. The most promising approach to reconciliation is to build on the progress in hydroproject design (Table I) as broadening the constituency. The aim is to promote a national debate to ascertain if there are criteria under which some reservoirs could still be developed in tropical forest regions that might be acceptable and sustainable. We believe that the 'transparency' in decision-making and pluralism that are necessary for success in such a debate will themselves significantly contribute to consensus-building. The whole process must be transparent, including access to consolidated budgets, so that who gets subsidies will be known to all. For pluralism, academia, and NGOs, the private sector as well as the government must be included. This implies a certain amount of decentralization, especially of mitigatory measures. Full participation, especially of all affected people and their advocates, is also essential. This brings responsibility: all groups must be held accountable for objective performance standards. In addition, environmental standards for development projects are improving. Therefore, because a ^ Sustainability as a concept has been formally endorsed as an official priority of the United Nations system, and by the World Bank. Although the Bank knows more about the concept than it is comfortable in admitting, it finds difficulty in operationalizing the concept in all of its work. As they depend on the hydrological cycle, hydroprojects are theoretically renewable indefinitely. Sustainability here refers to two levels. First, the environmental and social costs — often not fully internalized — must be valued and clearly outweighed by the benefits. Second, the 'life' of the project must not be damaged by environmental abuse, such as rapid sedimentation due to lack of watershed management upstream. Daly & Cobb (1989) have thought through the concept of sustainability, as have Adams (1990), Goodland etal. (1991), and Goodland & Daly (1991, 1992).

122 Environmental Conservation, Vol. 20, Nr 2, Summer 1993 — © 1993 The Foundation for Environmental Conservation — Printed in Switzerland

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TABLE I

Broadening the Design Constituency of Hydroprojects. Approximate Era

Design Team 1. 2. 3. 4. 5. 6. 7.

Engineers Engineers + Economists Engineers + Economists + then add EIS* on to end of completed design Engineers + Economists + Environmentalists Engineers + Economists + Environmentalists + Affected People Engineers + Economists + Environmentalists + Affected People + NGOs Engineers + Economists + Environmentalists + Affected People + NGOs + National Consensus

Pre-World War 11 Dams Post-World War II Dams Late 1970s Late 1980s Early 1990s Late 1990s Early 2000s ?

' EIS: Environmental Impact Statement which was started when the design was complete; a recipe for confrontation and waste.

reservoir may take twenty years from investigation to completion, today's best practice is the minimum acceptable standard. Assuming that national criteria can be agreed upon, and assuming they can be substantially met, are there conditions under which such a reservoir could be justified? Our personal opinion, separately and together, is yes. Many hydroprojects are fraught with major environmental problems, but in the case of others, such problems can be soluble — although with much more effort than is apt to be accorded nowadays. On the other hand, hydroprojects with large reservoirs also may have major side-benefits, such as flood control, improved water-quality, and fisheries. Under certain conditions, recreation, tourism, irrigation, and navigation, can be made compatible with hydropower, whereas without the added benefits of hydropower, the environmental problems of coals (e.g. carbon dioxide/ 'greenhouse' effect) and nuclear power* are much less soluble (Table II), and among the alternatives, severe TABLE II

Environmental Ranking of New Energy Sources. [ simplified] BEST 1. 2. 3. 4. 5.

SOLAR (+ hydrogen) PHOTOVOLTAICS WIND TIDAL & WAVES BIOMASS (+alcohol)

RENEWABLE & SUSTAINABLE

6. HYDROPROJECTS 7. 8. 9. 10. 11.

POTENTIALLY SUSTAINABLE

GEOTHERMAL GAS OIL COAL NUCLEAR

NON-RENEWABLE & UNSUSTAINABLE

damping of electricity demand could seriously constrain economic development for many developing countries. What might such national criteria be? Producers, consumers, and the national authorities, should compile their own lists and their own ideas on the criteria which they judge most appropriate. The present list is suggestive only. The criteria-setting process must be widely transparent, in order to engender national consensus. The purpose of this paper is to present the case that tropical forest reservoirs, meeting such national criteria, could be made environmentally acceptable. Assume that a hypothetical nation, some of which is clothed with tropical forest, needs more energy than formerly. Brownouts, load-shedding, and rationing, already are predicted to be unavoidable shortly. The choice is between coal, nuclear, and hydro. All gas and oil has been exploited, or is not economic. The scope for interconnections with neighbouring countries has been exploited, or is not feasible. This is important to know because interconnections enable a more acceptable site in a neighbouring country to be taken up before a worse site in the country in question. Cooperation between Uganda and Kenya is a case in point. The crucial national question urgently needing resolution: 'Is there a set of criteria which could justify reservoirs in tropical forest regions?' Although this would apply to tropical forest dams in general, important countryspecific criteria also would be necessary. Thus trade-offs are being faced in many countries, such as between massive increases in coal-burning on one hand and, on the other, constructing the world's biggest dam, such as Three Gorges in China, or the Narmada dams in India. Global common-property issues, such as carbon dioxide accumulation and biodiversity conservation, should not be compromised by country-specific criteria.

WORST SECTOR CRITERIA * The nuclear industry has spent about 75% of total R & D budgets over the last four decades, but even now only generates 3% of global commercial energy. Rather than earning a profit after all these subsidies, abandonment of nuclear plants in the US alone caused $10 thousand million losses for shareholders. As 10,000 to 20,000 new nuclear plants would be needed over the next 40 years to replace coal, or opening a new plant every 3 or 4 days for decades, this is highly inadvisable. Should the victims of the 1986 Chernobyl accident exceed 4 millions, as seems likely, this will postpone any recrudescence of nuclear projects. If even the skilled and disciplined Japanese can be crippled by the 'very serious' 9 February 1991 accident in Mihama, the possibilities in 10,000-20,000 new plants are not reassuring. If radioactive waste storage is solved, and, in addition, if 'inherently' safe designs are achieved, then prospects would improve.

For the purposes of this discussion, we assume that the following conditions prevail: the price of electricity must substantially have already reached the long-run marginal cost. Practically all consumers are metered; metres are substantially precise; and major arrears cause prompt cessation of service. The financial stability of the power utility has to be ensured. Most energy conservation and efficiency measures must be substantially in place, both in generation and transmission, as well as inside homes and factories (Shepard, 1991). 'Substantially in place' can be determined when the marginal economic cost (including environ-

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mental externalities) of saving an additional kilowatt-hour through conservation becomes as high as the marginal cost of a new one produced and delivered to the consumer. This follows from the above assumptions. As conservation measures are always advancing, implementation will always lag behind savings potential. The goal is to minimize this lag. Also, conservation cannot reap results overnight because of the restraints of such factors as the pace of replacing capital stock. A long-term, least-cost energy services perspective is needed. And 'least' cost here must include as fully as possible the foreseeable environmental and social costs to be borne in the future (i.e. intergenerational costs). Decoupling of profits from sales is in the utilities' interest, so that they can make money on margin and not on volume (as markets are not perfectly efficient). Progressive utilities have started 'selling' conservation to consumers. Utilities should be rewarded for efficiency — cf. Flavin, 1984, 1986; Chandler, 1985; Gamba etal., 1986; Anandalingam, 1987; Guzman, 1987; Hagler, Bailly Co., 1987; Holdren, 1987; IEA, 1987, 1989; Domelen, 1988; Flavin & Durning, 1988; Goldemberg et al., 1988; Johansson et al., 1989; Moreira, 1989; World Bank, 1989a, 1989ft; Fickett et al., 1990; Lovins, 1990; Naviglio, 1990; PROCEL, 1990; Januzzi et al., 1991; Noguiera, 1991. Discounts encouraging overconsumption by large consumers have been repealed, but not so penalized that those consumers start to generate their own power with possibly worse impacts. Large consumers have shifted to less electricity-intensive methods, where these were economically feasible. (Aluminium smelting will always be energy-intensive.) National energy efficiency equipment standards are widely in place and cogeneration potential is being rationally exploited. All economically perverse subsidies and other incentives have been rescinded. For example, some electricityand fuel-pricing policies mandate that electricity and gasoline/diesel prices be the same at the power-plant, refinery, port, or capital city, as they are at the furthest frontier outpost. Such policies promote excessive consumption of fuel, distort industrial, population, and agricultural-siting policies, raise prices in the main load centres, and discourage efficient energy production in remote areas. All rehabilitation and expansion of existing sites has already been accomplished. This is almost always achieved at much less environmental and economic cost than construction of new sites. The large number of hydroprojects completed in the 1950s and 1960s can be modernized to postpone the need for new projects. Owen's Falls, in Queensland, Australia, for example, only turbines 50% of the available water. DAM CRITERIA

As outlined above for sector criteria, we assume all reservoir sites outside tropical forests already to have been developed, or to be not socially, environmentally, or economically, acceptable. The following six criteria are proposed (the order of dealing with which does not imply priority). First, that the proposed dam has a high ratio of power production per area inundated, though some hydroprojects have no reservoirs at all. On a ratio of kilowatts per

Conservation

hectare*, the reservoirs with the highest ratios, numbering many hundreds, include Pehuenche, Guavio, and Paulo Afonso; all exceed 100 Kwh/ha.^ The lowest-ratio reservoirs, producing less than 10 Kwh/ha, include Brokopondo, Balbina, Sobradinho, Samuel, Babaquara, and Curua-Una, all of which produce less than 5. Babaquara's low ratio contributed to its cancellation. Few produce less than 1; such are Suriname's Brokopondo and Burkina Faso's Kompienga. Could one admittedly arbitrary criterion or cutoff point be 30, as in Tucurui (Table III)? Clearly this depends on an expanded cost-benefit analysis in each case. If the ecosystem or ecocomplex to be flooded is intact primary tropical forest, the ratio should be set much higher (say, 100); if the ecosystem or ecocomplex is agricultural or degraded land, then the ratio should be set lower. Economists are struggling to assign prices to intangibles, irreversibles, and intergenerational equity, such as are involved in extinction of species. Second, that the proposed site and surroundings have had a thorough biotic inventory, and that there are no centres of species endemism, rich biodiversity, or other special features. The ecosystems represented on the proposed site should be very well conserved in perpetuity near by, in a compensatory area that is ecologically equivalent to, or better than, the flooded area. The biotic salvage will be effective. (Note: Rescue for release alive into biotically impoverished habitat or into zoos and arboreta has rarely been effective historically, although captive breeding and reintroduction merits invigoration. More cataloguing and preservation of seeds and dead specimens also is urgently needed.) Third, that the reservoir water retention time is brief; days or weeks, rather than many months (i.e. a rapid circulation rate). The shorter the retention time is, the less time will there be for anaerobic conditions to be created, and the better will be the water-quality both in the impounded area, as well as downstream, for all uses.^ The nearer to 'run-of-river' the project is, the fewer will be the environmental problems. The trade-off here will be between valuable inter-seasonal and over-year regulation, which can be less needed in seasonless rain-forest areas. Less regulatory capacity means fewer benefits from flood control. This essentially means that two types of sites are especially valuable. First, are canyons in which the reservoir does not rise above the top; these do not need large flows. Harnessing waterfalls that fish never ascend naturally avoids migratory-fish problems. Second are nohead instream axial turbines which do not flood any forest. The best sites have such low volumes of biomass that decay will not contribute significantly to 'greenhouse' gases or * This is a serviceable but arbitrary ratio. Both GWh and Kwh/ha would be better indicators. * This paper focuses on hydro-reservoirs which are increasingly common in tropical moist forests, rather than on irrigation reservoirs which do not occur in tropical moist forests; some multipurpose reservoirs, and those in tropical dry forest remnants (e.g. India's Narmada), are mentioned. Irrigation reservoirs may be slated for the tropical dry forest remnants and these would be even more problematic than those in tropical wet forest. '' Decaying tropical forest generates massive volumes of 'greenhouse' gases — especially methane, which is 32 times more damaging than carbon dioxide. Large, shallow reservoirs from which forest is not removed may generate vastly more 'greenhouse' gases than a coal-fired thermal equivalent (cf. Gupta & Pachauri, 1990).

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TABLE III

Hydropower Generated per Hectare Inundated. (Examples only) Project (Country) Paulo Afonso (Brazil) I-IV Pehuenche (Chile) Guavio (Colombia) Rio Grande II (Colombia) Itaipu (Brazil and Paraguay) Aguamilpa (Mexico) Sayanskaya (USSR) Churchill Falls (Canada) Grand Coulee (USA) Urra I (Colombia) Jupia (Brazil) Sao Simao (Brazil) Tucurui (Brazil) Una Solteira (Brazil) Guri (Venezuela) Paredao (Brazil) Urra II (Colombia) Cabora Bassa (Mozambique) Three Gorges (China) Furnas (Brazil) Aswan High Dam (Egypt) Curua-Una (Brazil) Samuel (Brazil) Tres Maria (Brazil) Kariba (Zimbabwe/Zambia) Petit-Saut (French Guiana) Sobradinho (Brazil) Balbina (Brazil) Babaquara (Brazil) Akosombo (Ghana) Kompienga (Burkina Faso) Brokopondo (Surinam)

Final Rated Capacity (MW)

Normal Area of reservoir (ha)

3,984 500 1,600 324 12,600 960 6,400 5,225 2,025 340 1,400 2,680 7,600 3,200 6,000 40 860 4,000 13,000 1,216 2,100 40 217 400 1,500 87 1,050 250 6,600 833 14 30

1,600 400 1,500 1,100 135,000 12,000 80,000 66,500 32,400 6,200 33,300 66,000 243,000 120,000 328,000 2,300 54,000 380,000 110,000 144,000 40,000 8,600 57,900 105,200 510,000 31,000 421,400 236,000 600,000 848,200 20,000 150,000

Kilowatts per hectare 2,490 1,250 1,067 295 93 80 80 79 63 55 42 41 31 27 18 17 16 14 12 8 5 5 4 4 3 2.8 2 1 1 0.9 0.7 0.2

Note: This table is indicative only, as it does not reflect the value of the land inundated, which differs greatly in value in different instances. Some of the 'land inundated' is river-bed. The more reliable ratio derived from 'kwh/ha' instead of 'kw/ha' is being calculated. The ranking would be improved, but little altered, if river-bed or normal annual-flood areas were subtracted. Islands in the reservoir also could be subtracted in certain cases. Some of these figures are for non-forest reservoirs, and most are hydropower, rather than irrigation, reservoirs. Area inundated is the key issue. Less-seasonal tropical wet forest reservoirs do not need to be large. Optimizing the trade-offs at the margin of reservoir capacity is more influential than the difference between having or not having a reservoir.

eutrophication, or impair fish- and water-quality; nor will valuable biomass be wasted or clog turbine intakes. Removal of economically extractable biomass decreases 'greenhouse' gas production and water-quality risks. By inventing submersible chainsaws, Eletronorte (the federal power agency for the Amazon region of Brazil) utilizes already inundated trees in their Tucurui reservoir (Cadman, 1991). Brief retention-time has to be balanced with storage needed for irrigation and navigation. Fourth, that there are no vulnerable ethnic minorities living in, or using, the general area of the proposed site. Also, there are no other settlements to be affected, unless oustees' livelihood after resettlement is guaranteed to be better than before any moves, as measured by systematic socio-economic surveys. Higher 'firm GWh/family-displaced ratio' projects should have preference, but more significant is the subsequent improvement in livelihood. This means that the proposed site has been thoroughly assessed by sociological and anthropological professionals, well before any decisions can be made. Direct internalization of costs needed for adequate resettlement may be acceptable for normal oustees, but for vulnerable ethnic minorities, experience shows that it has not yet been possible to achieve adequate resettlement. Sometimes it is

not obvious who the beneficiaries are. For example, in tropical forest reservoirs used for export aluminium smelting, the beneficiaries are the industrial countries' aluminium consumers. The question then arises for whom are the tropical hydroproject-owning decision-makers deciding? Thus in James Bay, the Cree Amerindians claim the land flooded, while the Quebec and Canadian governments also have claims; is 'North America' the sole beneficiary? These questions highlight the need to address explicitly the trade-off between the beneficiaries and the people bearing the costs. Fifth, that there are no water-related diseases, such as malaria, Japanese 'B' encephalitis, or schistosomiasis, anywhere in the general region. Nor are they likely to arrive. Any risk of their arrival can be reduced by destruction of the nearest foci. If water-related diseases are present, they are preferably eradicated before the impoundment creates more habitat for them. If this is impossible, then the disease should be at least controlled, and a public-health component integrated into the project design. Sixth, that the proposed dam is sited above undammed tributaries, to help to minimize changes in flood regime (on which wetlands depend) and to provide alternative up-river sites for migratory fish. There is much uncertainty even in

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the relatively very simple, depauperate northern fish biological systems, and their behaviour related to impoundments. Certainly, much more effort than at present is needed to increase the benefits and opportunities from fisheries. Also, the dam is proposed for an already-dammed river. From the environmental point of view, dams should be concentrated on already-dammed rivers, rather than siting one or a few dams on a larger number of rivers. Thus, a representative sample of the nation's rivers would remain in their natural, free-flowing state. This trade-off with the risk of low-flows curtailing power output, should not be common to the extent that tropical wet forested catchments are not usually seasonal. In multipurpose dams, the enormous value of the annual flood restoring cultivational and natural productivity downstream should be factored in. It is relatively easy at the design stage to include bottom sluices for needed water releases. Dams should be avoided that would cause plant or animals' species extinctions (including those of migratory fish that would be denied access to breeding- or feeding-sites). This means that the damming of the last few free-flowing rivers in a region will be even more difficult to justify. In tropical forest areas, roads built to facilitate hydroproject construction or operation can 'open up' significant areas to colonization and deforestation. Therefore, care must be taken during road planning and operation to reduce this most undesirable effect. CRITERIA ON SMALL-SCALE AND UNCONVENTIONAL POWER POTENTIALS

Small-scale and unconventional potential alternatives are being examined or are already substantially exploited. Privately owned renewable-energy generators sell surplus to utilities. a) No-dam (or very low-head dam) axial tube turbines within river. b) Small generating systems (including water-wheels). c) Solar elsewhere in the country (includes photovoltaics, tidal, wind, and hydrogen from splitting water molecules).* d) Biomass energy production (biomass plantations, garbage, and sewage). Many tropical forest countries contain dry sunny or even desertic regions where solar-powered electric plants can be sited. They occupy 1/lOth to 1 /20th of the land of even the 'best' (e.g. high-head/low area) hydroschemes, and can often put otherwise unproductive land to sustainable use. We feel, and the World Bank is in process of calculating, that this is already economic in comparisons made with hydroprojects when the value of inundated forest is internalized, even imperfectly. POPULATION STABILITY CRITERIA

Human population stability is an essential precondition for all sustainable use of renewable resources, including use * Hydrogen from splitting water molecules is likely to become economic and technically feasible very soon (Ogden & Williams, 1989). While it is difficult to generate 500MW from garbage and sewage now, a large number of smaller such plants would reduce the need for large projects.

Conservation

both of hydropower and of tropical forest.''' Human populations of tropical moist forest-owning countries annually increase by more than 2.4%, which means a doubling in 25 years. These sustainability criteria will be difficult enough to fulfill without having to double the electricity supply every 25 years. Actually, the situation is more severe in those countries in which the per caput electricity use also is rising. Average planned power-demand growth is about 7% in developing countries — doubling every ten years. (In Brazil per caput use is projected to rise 55% by the year 2000.) It is sensible to permit electricity companies to profit from their customers' investments in conservation, and certainly utilities should not be penalized for investments in conservation. An increasing number of northern utilities now find it more economic to provide free fluorescent-light fixtures and to promote or even to subsidize other more efficient appliances for consumers, rather than generating more electricity. This suggests that the pricing policy is wrong in these cases, as noted above. Although this requires sensible action on pricing in the power market which does not yet exist in most developing countries, the preference is clear; utilities should now conduct free energy audits for consumers, showing where energy can be conserved and rendered cheapest. To the extent that this holds for population, power corporations' support of governmental family planning goals will reduce the national controversies and project delays which are commonly experienced. Power corporations already help to the extent that televisions are contraceptive. We do not want to burden the power sector with righting all societal ills. However, population stability is so important for sustainability that family planning or similar activities should be components of all relevant projects, including those of the power sector. CASE EXAMPLE OF BRAZIL

The above suggestions are generic rather than specific to any particular country. However, Brazil in general, and Eletrobras (Brazil's federal power agency) and Eletronorte in particular, are deeply concerned with both energy conservation and environmental impacts. So indeed is the citizenry — if not more so (Eletrobras, 1986, 1987, 1990; Goldemberg, 1987; Holtz, 1989;Juras, 1990, 1991; Lacerda, 1990; Zatz, 1990; Serra, 1991). Brazil has probably saved more than US$1 thousand millions in avoiding new generation capacity, because of recent major improvements in its electricity tariff structure which led to improved conservation and efficiency (Geller, 1986, 1988, 1990). The World Bank has commended Brazil for moving towards a more appropriate tariff structure than it formerly had, and in the direction of the difficult goal of raising the price of electricity towards the long-run marginal cost of production. The World Bank values the partnership with Eletrobras, and has assisted in financing the federal electricity conservation programme under the direction of their Science and Technology Secretariat. The World Bank is also glad to be partners with the Brazilian National Environmental Secretariat in the first and biggest loan they have made solely for national environmental t and, we would think, for virtually all real sustainability. — Ed.


priorities and institutional strengthening (US$117 millions, in February 1990). The Brazilian Government, Eletrobras, Eletronorte, and environmentalists, are now adopting a new position concerning new Amazonian hydroprojects, resulting from evolution of environmental awareness, specific legislation, and experience with Amazonian issues (Eletrobras, 1986, 1987, 1989, 1990; Adam, 1988; Goldemberg & Barbosa, 1989). Current construction rankings suggest that environmental criteria are most effective when applied proactively. This emphasis on environment, conservation, and efficiency, is exceptionally well-placed. The recent hiring of substantial numbers of environmental professional staff by all Eletrobras' concessionaries is encouraging. For example, Eletronorte's environmental staff rose from one part-time at the time when Tucurui was being designed in the late 1970s, to over 100 full-time today (Goodland, 1978, 1990a, 1991). Environmental training throughout the entire power sector has increased dramatically. Capital availability is a major constraint on the power sector, which has been responsible for as much as 25% (US$30 thousand millions in 1973-83; now down to about 19%) of Brazil's foreign debt. Eletrobras may require of the order of US$75 thousand millions to meet its AD 1991-2000 demand projections. In today's era of severely limited capital, such huge public investments in any sector such as power supply could imply reducing investments in other sectors — especially environment and the social sectors of education, nutrition, and health, as well as in poverty alleviation. Thus electricity, formerly a driving force behind social and economic development, could instead hinder vital welfare gains, if improved pricing, conservation, and environmental precautions, are not achieved. Could we be entering an era in which power investments reduce investments in other sectors whose growth was the driving force underlying electricity demand projections? Electricity rationing started in Brazil during the Northeast's 1985-6 drought, and is projected to increase in the mid-1990s. Eletrobras projects that electricity demand will double between AD 1988 and 2000. This means that 37,000 MW capacity will need to be installed by AD 2000. How best to install the equivalent of three new Itaipus (cf. Table III)— by some criteria still the world's largest hydroproject — in this decade is accordingly the great question, with how to avoid repeating delays, confrontations, and wastage? Reports are guardedly encouraging. One of the next Amazonian dams to be built may be the 1,328 MW Serra Quebrada project just upstream from Tucurui. This meets many of the criteria listed above, and contrasts starkly with the Balbina/Babaquara-type of dam (Visao, 1986; Sao Paulo Energia, 1988; Fearnside 1989, 1990a, 1990b; Moreira, 1989; Dwyer, 1990; Gribel, 1990; Hecht& Cockburn, 1990; Cummings, 1991). According to Eletronorte, there are no Amerindian settlements in the area, and there is little involuntary resettlement. The reservoir is small and practically part of the freely-running river, and it has a high ratio (31.5) of Kwh/ha of land flooded, which is slightly better than that of Brazil's biggest hydroproject, Tucurui. In addition, it is on the already-dammed Tocantins River, and so would not be the first dam on a hitherto undammed Amazonian river.

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This presages well for the ranking of the next set of Amazonian dams, potentially identified by Eletrobras' 'Piano 2010' for the next twenty years. The range between the 'best' and 'worst' hydrosites is so wide that the leastcost (after conservation) power investment programme will include a full array of sources, such as gas and imported power. Coal, and possibly at some time in the future even nuclear (with best technology), may be found by Brazil to be better than the 'worst' hydro on future ranking based on national criteria. A mixed hydro-thermal system would moreover involve fewer reservoirs. Eletronorte has a massive challenge. Recent developments {e.g. PROCEL, cancellation of Babaquara, and the criteria set for Serra Quebrada) suggest promising improvements, while national consensus on the kind of criteria suggested above will ensure that the trend is strongly positive. The World Bank wants to support this trend to the fullest extent possible. CASE EXAMPLE OF INDIA

The case of India differs substantially from that of Brazil in the sense that India has not invested a substantial share of its power-sector resources in hydroelectric plants. The main reasons for this are, first, that India has an estimated 148.6 thousand million tons of non-coking coal, and, second, that development strategies have relied only to a very small extent on foreign borrowings. Even though the Indian economy has generally recorded a savings rate of over 20%, resource mobilization in the power sector remains severely constrained. This has happened for three main reasons. First, powersector demand growth in recent years has been rather high (9-10% p.a.), with a growing peak demand relative to baseload demand. Second, the electric utility industry has accumulated heavy losses on account of suppressed tariffs and operational inefficiencies. Third, highish human population growth (1.8% p.a.) continues to impose onerous demands on investments in education, health care, welfare schemes, and infrastructure, thereby relegating the power sector to one of many sectors competing for limited resources. These factors have resulted in a preference in India for relatively short-gestation thermal power-plants, as opposed to hydroelectric capacity. While hydro and thermal sources had almost the same share of power generation (45% vs 55%) in 1965-6, the ratio is now 30% hydro vs 70% thermal. Fortunately, Indian coal is low in sulphur, even though its ash content exceeds 40% in some powerstations. As a result, the main environmental problems of thermal power-stations are particulate emissions and ash disposal. Except in regions such as that of the Rihand reservoir — now well-known for the Singrauli thermal power-plants — acid rain is not now, nor is it likely to become in the future, much of a problem. India's main hydrosites are in the Himalayas, with a large share concentrated in the North-east. Unlike Brazil, India has a land-to-population ratio of 0.004 sq. km per caput, as compared with Brazil's 0.07 km per caput. High population densities, land scarcity — particularly agricultural — and disappearing forests, are three crucial factors in Indian hydro planning. For example, the major issue in the 1,200 MW (costing US$1.13 thousand millions)

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Sardar Sarovar hydro and irrigation project on the Narmada River is the involuntary resettlement of people. These 90,000 oustees are not well equipped to adapt to new habitats, having historically a long intergenerational dependence on the land and its specific biota. In addition, the 'track record' of Indian involuntary resettlement is poor, so that hydroprojects are likely to run into heavy public resistance (Goodland, 1985, 1989; Pachauri, 1990a, 1990/?, 1990c). Capital constraints in the Indian economy are intensifying; therefore the impact on the power sector is likely to become more serious in coming years. Typically, the power sector has accounted for less than 20% of planned public-sector investments, but the targets for the current (eighth) five-years' plan demand a higher share. Therefore, energy efficiency improvements become more urgent. Conservation is important here not only at the enduse level, but also in the energy supply industry itself. For instance, official indications of transmission and distribution losses have risen to 22%, or as high as 40% in some states. Similarly, coal thermal efficiencies are well below state-of-the-art levels, with some plants attaining only 20%. There are, therefore, tremendous opportunities for efficiency improvements in the power industry which would moderate new capacity growth, and without sacrificing electricity supply. Irrationally low energy tariffs, far below long-run marginal costs, is the main reason for lack of energy conservation. This is particularly true in the power sector, wherein some end-user subsidies are extremely high, as is shown in Table IV. Efficiency improvements must begin with adjustment of energy tariffs, in order to provide the consumer with appropriate 'signals'. Improved efficiency may not significantly reduce aggregate demand for power to the extent that quantity restriction also constraints. Investments in physical capital have to be matched with investments in human capital — especially in power-sector planning and environmental assessment. Such human capital investments would have larger returns than almost any other form of investment in the power sector. CONCLUSION

Our conclusion devolves on the likelihood of a country fulfilling most of the above criteria, though these criteria are stringent even for industrial countries. To what extent will such criteria be fulfilled? We agree with sceptics who rightly claim that not all these criteria will be fully met. But the process of agreeing on, and approaching, the criteria TABLE IV

Indian Energy Tariffs. Economic Price

Market Price

Domestic Cooking (Rs/1000 KCal) Kerosene Electricity

7.78 20.43

5.63 8.49

Irrigation (Rs/1000 cu m of water) HS Diesel Electricity

109.64 107.19

142.02 9.03

Energy Source

[Note: Rs. = Indian Rupees; HS Diesel = High Speed Diesel; KCal = Kilocalorie; R.K. Pachauri 1991 pers. comm.]

will be salutary. Do sites fulfilling most criteria exist? The 'least bad' site certainly exists! The answers will be difficult or worse in some cases, but quite possible to get in others. Although difficult, this course is better than the alternatives, and much easier than damping demand until 'solar/hydrogen' energy becomes feasible we hope in the coming decades. Such damping is likely to be exceedingly painful to consumers and to the development of the country. The damping pain should be thought through and discussed with all interested parties, as part of the criteriasetting and consensus-building exercise. Proper pricing will make the choices more obvious. In sum, we need to compare costs and benefits much more rigorously and comprehensively than has been the case so far. In our imperfect world, the reality is that not all these criteria will ever be totally met. Therefore, national consensus is needed to decide if conservation, efficiency, environmental precautions, and other alternatives, are being pursued adequately or not. The national consensus is essential in order to agree on the threshold at which the second-best — or 'least bad' — site should be developed. National agreement on criteria will reveal where the thresholds lie. As soon as the various environmental impacts can be valued, the polarization of society will be defused. The need is to make uncertainty transparent and — to the utmost extent possible — positive, rather than covert and manipulative. As hydropower is exceptionally capital-intensive, and capital availability is a major constraint in nearly all nations, tropically forested or not, it is imperative to follow the least cost (as defined above to include social and environmental costs) sequence of development. Of course, least cost specifically includes saving kilowatt-hours, not just generating them, based on consumer choice when facing appropriate prices. We urge the use of proper opportunity cost of capital. Arguments for simultaneous development of higher-cost alternatives should be rigorously resisted. Power corporations are, commendably, making the transition away from focusing solely on new capacity to movement towards conservation and efficiency. This is difficult for them because new capacity is under their almost total control, whereas conservation means that they have to persuade other sectors, outside their control, to think into the future and mend their ways. Power corporations really wanting to promote sustainability, and to reduce national controversies and delays, would follow a vigorous action programme with serial steps along the following lines (Goodland, 1990a, 1990ft, 1990c). 1. Promote fulfilment of agreed-on criteria. 2. Manage demand to the fullest extent justifiable. 3. Promote agreed-on valuation of impacts. 4. Seek sites fulfilling nationally agreed-upon criteria. 5. Sequence all sites in a national least-cost power programme, under credible scenarios. 6. Rank all potential sites on the basis of these criteria, and only then: 7. Develop the least-bad new site fulfilling such criteria. ACKNOWLEDGEMENTS

In addition to helpful comments by World Bank colleagues, we wish to acknowledge with great pleasure the


support of the then president of Eletronorte, Armando Araujo (now Secretary of National Energy), and Howard Geller, for their most helpful reviews of this paper. SUMMARY

Today's polarization of society 'for' or 'against' big hydroprojects relates to environmental costs, which are borne particularly by vulnerable ethnic minorities and the poor; such costs include species extinctions and tropical deforestation. This counter-productive polarization can be reconciled by transparency and mutuality of planning, by pluralism involving the local populace and especially all affected people, and by engendering national consensus on the best project that is available and practicable. Detailed criteria for consensus are discussed, and include promotion of energy efficiency and conservation, ranking of alternatives to the next hydroproject, and environmental ranking of potential sites. Environmentally well-designed hydroprojects can be preferable to alternatives {e.g. coal or nuclear), and most environmental costs can be prevented, thus making hydroprojects renewable and sustainable.

Sustainable?

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