Fudging the books

2. Over-estimating job-creation potential

One of the major stated reasons for building the James Bay Project was that it would create 125,000 jobs – at an admitted cost, incidentally of $80,000 a job. In the event, only 22,000 jobs were created during the busiest period of construction in 1977: and by 1978 there were only 12,000 – 13,000 on-site jobs available, most of which were unskilled. The Committee for the Defence of James Bay comments,

“Indirect jobs will be created as well, of course, but as the project moves towards completion workers will be laid off, boom towns will become ghost towns, and the economic benefits will evaporate. A completed dam requires very few maintenance personnel. This fact is especially important to the native population, which might find themselves permanently unemployed after working for a few years – having lost their land and their livelihood in the process.” [24]

Elsewhere, we find the job-creation benefits of large scale dams similarly overestimated. The Tenn-Tom Canal is a case in point. Fred Powledge points out:

“Ordinarily, redevelopment benefits are calculated on the basis of hiring local workers who are otherwise unemployed: the assumption is that hiring these people does not reduce productivity anywhere else in the nation, and so wages paid to such workers are not included as project costs. The Corps avoided even these questionable procedures and made three insupportable assumptions: that a ‘local’ worker was one who had been in the area for more than one day; that 80 percent of the work force was ‘local’; and that 100 percent of the local workers hired by the project were unemployed.” [25]

3. Failure to account for the energy costs of building the dam

Cost-benefit analysis rarely takes account of the actual energy required to build and operate a dam. Where such ‘energy accounting’ has been carried out, however, the results are often surprising. Thus, Linney and Harrison point out:

“Blocking a river’s course requires that an enormous amount of earth must be moved and a structure raised, either out of landfill and rock or concrete. Access roads must be built, often over long distances and steep terrain, as dam sites are usually isolated. If the dam is constructed of concrete, more petrol will be used to power the mixing plant on the site. Heavy, earth-moving equipment will be run during the 2-6 years of construction. With the exception of the use of dynamite in blasting, all these construction activities will require fossil fuel. Given the increasing cost of fossil fuel and its scarcity in developing countries due to foreign exchange constraints, the influence of fuel consumption should be evaluated. Some dams built in the past create a questionable net gain in energy (energy used in construction minus power generated) due to construction in isolated energy intensive sites, and a short life from sedimentation.” [26]

More specifically, when Dr. Philip B. Williams studied the energy accounts of the New Melones Dam in California, he found that the dam would result in a net loss of energy. As Tim Palmer, author of Stanislaus: The Struggle for a River, notes:

“From the projected average year’s 430 million kilowatt hours of electricity, Williams subtracted the energy costs of construction and maintenance: the loss of an existing power plant; energy for irrigation and pumping; and the energy costs of reservoir recreation. Williams’ bottom-line? A net loss of 39 million kWh per year.” [27]

4. Over-estimating the benefits of flood control

As we have seen in Chapter 10, the flood control benefits of large dams are frequently over-stated. No dam has yet been built to take account of the worst possible flood – the cost of doing so would be simply prohibitive. The problem, as Grant Ash, the Corps of Engineers’ own officer, points out, is that dams give people a false sense of security, tempting them to build on flood plains where common sense might otherwise tell them to avoid.

But although the Corps of Engineers is clearly aware of the dangers of building on flood plains, it nonetheless chooses to include the value of the property built there among the benefits it claims for a dam. Such a statistical sleight of hand, argues Brent Blackwelder of the Washington-based Environmental Policy Institute, allows the Corps to justify almost any project:

“Many of the structures now protected by upstream dams and levees were not in place and would not have been built were it not for the dam or levee. Using the Corps’ argument, almost any dam could be justified provided enough expensive developments were located in the flood-plain downstream from the dam.” [28]

In many cases, the claimed flood-control benefits of a dam often only benefit a tiny minority. That point was clearly documented in A Cost Share of Water Resource Projects when Project Benefits are not Widespread. [29] Among the examples given in the report, the following stand out as particularly profligate:

A planned $17.7 million dollar flood control scheme in Hendry County, Florida, will benefit just 21 farmers. Of those 21, 13 will receive most of the benefits – and four of those are large corporations, owning 61 percent of the 34 square miles to be protected. Moreover, two landowners have expressly stated that “they are against the current project because it would overdrain their land and they would rather have their land in its present state.” Ironically, the project is considered necessary in order to mitigate the flood damage caused by an earlier Corps’ scheme. As the GAO explain:

“Four levees were constructed in the mid-1950s to prevent floodwaters originating on the then sparsely developed land west of the levees from flooding the agricultural lands to the east. This construction and the subsequent increased development have aggravated flood problems on the lands west of the levees. The Hendry County project, authorised in 1965, provides additional flood protection west of the levees.” [30]

The South Sumter flood prevention scheme, costing some $2,742,610 is intended to reduce the damage of local floods through a 47-mile network of drains and channels. Although the original plans estimated that 300 people would benefit, it is clear that the major beneficiary has in fact been T.G. Lee Dairies, the largest landowner in the area. Indeed, according to the district conservationist, T.G. Lee purchased the land because of the benefits that would accrue from the project.

As a result of the project, the company has been able to upgrade 2,390 acres from unimproved pasture to 1,405 acres of cropland and 985 acres of pastureland, bringing annual benefits worth $25,095. Moreover, the scheme has also raised the value of the company’s land by $1,195,000. Nonetheless, neither T.G. Lee or any other of the beneficiaries of the scheme have had to make any contribution to the costs of the project. [31]

5. Ignoring the costs of decommissioning

The costs of decommissioning dams are rarely taken into account when the costs and benefits for a project are totted up. Where the dam has served flood control purposes, that is particularly relevant. Indeed, as Dr. Philip Williams points out: “Decommissioning costs may be extremely large if development has occurred in the floodplain downstream and is then exposed to flood damage.” [32]

6. Over-estimating the life of dams

Sedimentation is a major factor in reducing the projected, useful life of a dam, (see Chapter 16). In India, for example, dams are known to silt up between three and – in the case of the Nizamgara Dam – 17 times faster than expected. Nonetheless, it is clearly in the interest of a dam builder to estimate the longest life possible for a dam – thus spreading the initial high construction costs over a longer period, and hence reducing the proportion of those costs which are charged annually. Indeed, by extending the claimed useful life of a dam, a poor cost-benefit ratio can be transformed into a more favourable ratio.

Thus, in its 1961 analysis of the benefit-costs for the New Melones dam in California, the US Corps of Engineers estimated a 50-year lifespan. On the basis of that figure, it arrived at a benefit-cost ratio of 1.6 to 1. But Parry and Norgaard report,

“The very next year, the Corps decided to increase the period of analysis to 100 years. With other factors, such as increasing prices, the Corps derived a new and much more favourable benefit-cost ratio of 2.5 to 1. The change to the 100 year period obviously was of great advantage in promoting the New Melones Project.” [33]

7. Under-estimating construction costs

The problems encountered at Sri Lanka’s Kotmale Dam – part of the Mahaweli Scheme – which had to be moved from its original site owing to geological problems emphasises the dangers of under-estimating construction difficulties. Yet all too often the estimates of construction are based on what can only be described as ‘wishful thinking’. Thus, in the case of Papua New Guinea’s Purari project, the government claimed that a feasibility study, undertaken jointly by the Snowy Mountains Engineering Corporation and Nippon Koei, gave the project an all-clear at least as far as its economic viability was concerned.

Nothing, in fact, could have been further from the truth. Indeed, as the Purari Action Group point out, some of the assumptions used to estimate construction costs were ‘highly tentative’. Thus:

“A feature of the feasibility study is its vagueness in costing a number of key elements in the dam construction. This vagueness is mainly to do with assumptions about material availability and suitability. As the area is so remote and there is so little background data on soils, geology and hydrology and negligible construction experience, more than the normal amount of care in evaluation should be expected. However, the study reveals that only a relatively small amount of testing of materials has been carried out. In some important areas it recommends that further testing and analysis should be done before the study is formally adopted – an indication that the authors themselves feel that the amount of materials testing had been inadequate.” [34]

In particular, the Purari Action Group pointed out that the costs of stripping away landslide debris in order to construct a proposed saddle dam were uncertain; and that it was unknown whether suitable earthfill was available locally.

8. Failing to count land flooded as a cost

Writing in the Annals of the Oklahoma Academy of Science, biologists Drs. R. John Taylor and Constance Taylor, note:

“Paradoxically, there are about as many acres inundated in a reservoir (in Oklahoma water projects) as are protected downstream. In most cases the potential agribusiness yield of an entire floodplain, even receiving periodic flooding, and its adjacent uplands, exceeds the yield of the land protected on a flood-plain below the dam.” [35]

It is rare, however, for such agricultural losses to be accounted for in cost-benefit analysis. Thus, the 1980 House Committee on Government Operations for the US Senate learnt that 27,500 acres of farmland would be lost in flooding the Tennessee Valley Authority’s Columbia Dam Reservoir; in exchange, flood control would be provided for a mere 9,000 acres downstream. Yet, the project’s original planning documents “made no mention of the multi-million dollar loss of farm production and farm-related business.” [36]

Powledge also points out: “The builders like to forget that private land that is inundated by a federal project is, by definition, taken off the local tax rolls.” [37] That cost, too, is frequently ignored. In New Zealand, a local electricity authority tried to procure planning permission for a dam omitting discussion of the land which would be flooded. The land in question was, in fact, a substantial proportion of the district’s fertile farmland. In other cases – particularly in the tropics – there has been little attempt to put a value on the thousands of acres of natural forest which are frequently destroyed in order to create the reservoir for a dam.

9. Benefits of irrigation over-estimated

Irrigation is one of the major benefits claimed for large-scale water projects. In some American irrigation schemes, however, as few as 100 farms have benefitted from projects costing as much as $100,000,000. [38] That is, 1 million dollars has been spent per farm irrigated. Indeed, a 1981 GAO audit of six federal irrigation schemes found that the crops to be grown could never recoup the costs of providing irrigation at between $54 and $130 an acre foot of water. [39]

How then are such projects justified by the Corps of Engineers and other large dam-building agencies? The answer lies in part in overestimating the value of the crops that will be grown on the irrigated land. Once again, the New Melones dam provides an example. The Bureau of Reclamation estimated net irrigation benefits for the dam at $3,610,000 annually, with costs at $1,987,000. When Parry and Norgaard re-analysed the figures, however, they pointed out:

“The Bureau of Reclamation predicted irrigation benefits for speciality crops, such as grapes, deciduous fruits, oranges and vegetables – cotton – and feed grains. The Bureau estimated that the price of speciality crops would be the same during the lifetime of a 100 year project as they were in 1961. However, a 1970 study by Gerald Dean and Gordon King of the Department of Agricultural Economics, University of California, Davis, indicates that if present trends and plans continue, the speciality crop supply will increase, and, as a result of the inevitable effect of supply and demand, real grape prices will correspondingly decline 17 percent; orange prices will decline 4 \ percent; deciduous fruit prices will decline 7 percent; and potato prices will decline 43 percent between 1970 and 1980. ” [40]

As a result, argue Parry and Norgaard, the irrigation benefits from the complex of dams and levees of which New Melones is a part, had been over-estimated by $12 million to $24 million (at 1974 prices). Annual irrigation benefits from New Melones alone, they claim, should be “adjusted downward by at least $2,200,000 and possibly by as much as $4,403,000″. When over-estimates for likely cotton production and sales had been taken into account ($2,103,950 for the New Melones project), Parry and Norgaard found that there were “no or even negative” benefits for irrigation from the dam.

10. Over-estimating the benefits of recreation

In calculating the recreational benefits of a dam, the number of possible ‘visits’ to the dam and its reservoir by holiday-makers, fishermen, schoolchildren and the like are estimated and then multiplied by a dollar value per head. However, as Powledge points out:

“The arithmetic generally overlooks the facts that reservoirs tend to get built in places (such as the Tennessee Valley) where there are many other reservoirs, that the other reservoirs were justified in part on the number of projected recreational visits, and that a recreational visit to a New Reservoir means one less recreational visit to Old Reservoir B or C.” [41]

Indeed, in the case of Tennessee’s Columbia Dam – whose major stated benefit is recreation – there are another nine reservoirs within 50 miles of the dam site.

Moreover, it is difficult to square the claimed benefits from recreation with the more utilitarian demands that a dam itself makes upon its reservoir in order to generate hydro-electricity and fulfill its role in controlling floods. Again, Powledge makes the point:

“A controlled reservoir is not like a natural lake, with a fairly predictable waterline – its water level fluctuates, sometimes wildly, and when it is down, the recreation seeking public is treated to the spectacle of boat docks and launching ramps separated from the water by a hundred yards or so of impassable red mud.”

In its report on the Columbia River Dam,

“the Government Operations Committee . . . found that in the summer the reservoir would be held at 630 feet above sea level, creating an artificial lake 12,600 acres in size. After October 15th, the level would drop to 603 feet above sea level to leave more room for storage in the event of winter flooding. The Winter Lake would only be 4,300 acres in size. Between it and the normal shoreline would be more than 8,000 acres of mud-flats – hardly a modern version of Walden Pond. And, said the Congressional report, it was estimated that during one summer out of every four, the lake would not be able to make it back to its desired level because of lack of rain.” [42]

11. Over-estimating the economic benefits

Clearly, if it can be argued that a dam will bring industrial growth into a region, the benefits claimed rise correspondingly. Frequently, however, those industrial spin-offs are chimeras. Thus, in the case of Ghana’s Volta Dam, it was argued that the new lake would augment dramatically the business of the Volta Lake Transport Company (VLTC). Indeed, in 1961, it was estimated that the company would be carrying 150,000 tons of cargo a year by 1970: in 1964, more optimistically still, a figure of 453,000 tons was predicted.

In fact, the company’s fortunes have proved disastrous: as the Volta River Authority reported in 1976, “the VLTC continued to be faced with an acute shortage of cargo capacity, lack of spare parts and maintenance facilities and inadequate cargo-handling equipment.” [43]

Elsewhere, industrial benefits have been claimed which are purely speculative. Thus, the US General Accounting Office points out – in respect of the Blue River flood control project in Kansas – that many of the industries which it was claimed would be set up as a direct result of the scheme would in fact, have “been realised elsewhere, even without the project.” [44] It is doubtful, then, that they should have been included in the cost-benefit analysis.

But perhaps the most spectacular example of over-optimistic claims for industrial spin-offs comes in the case of the Tennessee Valley’s Tellico Dam. A major justification for building, the dam was that it would power a new industrial city to be built as a company town for Boeing Aerospace. In the event – when the dam was three-quarters complete – Boeing withdrew from the scheme. By then the dam had already cost over $100,000,000. Indeed, so small were the other benefits claimed for the dam that when a government committee reviewed the economic justification, it concluded:

“The interesting phenomenon is that here is a project that is 95 percent complete, and if one takes just the cost of finishing it against the total benefits . . . it doesn’t pay, which says something about the original design.” [45]

Elsewhere we find that dams have been built even though it was clear that the revenue they produced could not possibly recoup their costs. For example, the modern era of environmental awareness in New Zealand is usually seen as having begun with the controversy over the Manipouri Power Scheme. After years of official secrecy, the price paid by the aluminium smelting consortium for the electricity from this wholly publicly-funded project was revealed to be 0.2 c/kWh, and a later government raised the price about sixfold. Despite continuing secrecy on the costs of the project, it is doubtful whether even the new price recovers costs. No cost-benefit analysis was ever published. [46]

So, too, we find that the Indonesian government agreed to supply Japan’s Asahan Aluminium Company with 80 percent of the hydro-electricity for the Asahan Dam. The electricity was to be supplied at cost. Moreover, as the Purari Action Group reports:

“Even after the power plants are transferred to Indonesia in 30 years, the electricity is still to be provided for the company at cost. The Japanese company will determine for itself the cost of the power.” [47]

12. Under-estimating the environment costs of irrigation

More generally, the disastrous environmental effects of perennial irrigation are rarely taken into account in cost-benefit analyses. On the contrary, where dams provide irrigation, that irrigation is almost always counted as a ‘benefit’. Yet, it is rare indeed for perennial irrigation schemes to avoid the twin evils of salinisation and waterlogging – the more so when there is such clear reluctance on the part of the authorities to earmark any funds for drainage and other remedial measures.

Inevitably, the ecological costs come home to roost. In the US, the cost of building a master drain to the sea in order to remove the accumulated salts from the San Joaquin Valley has been estimated at a minimum of $1.2 billion. [48] In order to remove the salt from the Colorado River before it enters Mexico, the US has been forced to commission a desalinisation plant at Yuma. The expected cost is over $1 billion.

Yet, despite such expenditure, the problem of salinisation is far from solved. Indeed, according to Arthur Pillsbury, only the construction of the NAWAPA scheme can prevent South California from becoming a salt-encrusted desert. That scheme is estimated to cost $2 trillion – at 1973 prices. [49] Had those costs of establishing perennial irrigation been taken into account, would the dams that provided the irrigation water have seemed so attractive? And could they ever have been justified on economic, let alone ecological, grounds? In almost every case, the answer is undoubtedly ‘No’.

Conclusion

It thus seems that those who stand to gain politically and financially from the building of a large dam are willing to go to inordinate lengths to ensure that it will be built. Among other things, they are willing purposefully to mislead those who must be persuaded of the dam’s desirability and viability before the go-ahead to build it will actually be given. This they do by grossly exaggerating the dam’s likely benefits and seriously underestimating its probable costs – in particular its social and ecological costs which, as we have seen, are often totally ignored.

The power, prestige and financial resources of the politicians, bureaucrats and industrialists involved in dam projects greatly facilitates that deceit – as does the credulity and apathy of the public. Moreover, unlike the authorities, those who oppose dams – often local tribal or peasant leaders, obscure academics or youthful environmentalists – have meagre financial resources and little credibility.

To add to their difficulties, they must also confront the entrenched belief that large-scale water development schemes are an essential part of the process of economic development – a process which we have been taught to see as the only means of combating poverty and malnutrition, and of assuring health, longevity and prosperity for all. To challenge dams is thus to challenge a fundamental credo of our civilisation.

But enough of criticism. As we have already mentioned, the problems that dog modern irrigation schemes have not, historically, affected the irrigation systems of traditional societies. It is clear, therefore, that we have much to learn from the traditional irrigation societies of both the past and the present. In the next section we shall see how, in five such societies, all the problems associated with modern irrigation agriculture have been avoided and why.

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