China Goes Global: A comparative study of Chinese hydropower dams in Africa and Asia
Dr. Frauke Urban, Principal Investigator
Professor Laurence Smith, Co-Investigator
Dr. Giuseppina Siciliano (Research Fellow/Project Manager)
15 October 2012 - 14 July 2016
Professor Giles Mohan, Co-Investigator
Dr May Tan-Mullins, Co-Investigator
Objectives and Scope
China’s rapid economic growth has created a series of pressures which has forced the country to engage more closely with a number of low and middle income countries (LMICs). China’s growth has depleted scarce domestic natural resources and so part of its ‘Going Out Strategy’ encourages overseas investment to access natural resources such as energy and minerals. Access to overseas natural resources, new markets and technological advances, have made China the world’s largest player in large hydropower dam projects, usually backed by state finance and state-owned enterprises.
The aim of this project is to provide the first systematic and comparative analysis of the environmental, social, economic and political impacts of Chinese hydropower dam projects in low and middle income countries, that will inform corporate behaviour of hydropower firms in China and the UK and shape emerging national and international policy responses.
Four themes will be thoroughly investigated:
- Organization and motives of Chinese hydropower actors;
- Local and National Impacts;
- Governance implications;
- UK and OECD interests.
This project is a direct outcome of the ESRC-funded project ‘China as a new ‘shaper’ of international development’ (Ref: RES-075-25-0019) under the Rising Powers (RPs) Network scheme. The team now intends to advance the intellectual agenda and the insights gained in the network phase by conducting further work on China’s role in international development and to build on the institutional partnerships created in the first phase. The project will apply a multi-sited, comparative case study approach and will involve detailed empirical research in Ghana, Nigeria, Cambodia and Malaysia, which represent different facets of China’s hydropower in the global South.
We will conduct four case studies - two for Africa (Ghana, Nigeria) and two for Asia (Cambodia, Malaysia) - each of which has been chosen for representing a specific approach to Chinese dam building. Each involves the Chinese as dam developers, focuses on dams of more than 50MW, where construction has recently been completed or is in progress, and where access to the sites and to local communities is favourable. The hydropower projects under investigation are: Bui Dam in Ghana, Zamfara Dam in Nigeria, Kamchay Dam in Cambodia and Bakun Dam in Malaysia.
The project team comprises 10 institutes from the UK, China and each of the 4 countries involved in the case studies: SOAS, the Open University, University of Nottingham Ningbo in China, the University of Ghana, Cambodia Development Resource Institute CDRI, the Nigerian Institute of Social and Economic Research, Nottingham University in Malaysia, Universiti Malaysia Sabah, Tsinghua University in Beijing and International Rivers.
The research project will last 3 years in total, from October 2012 to July 2016, and is funded by the UK Economic and Social Research Council ESRC (reference ES/J01320X/1).
ESRC project website: China goes global
The project finds that Chinese dam-builders and financiers open up opportunities for low and middle income countries in Africa and Asia to attract large investments, to build up energy and water management infrastructure which in turn can contribute to national development goals and economic growth. Hydropower dams also contribute to low carbon energy generation and thereby create viable alternatives to fossil fuel energy generation, such as coal, oil and natural gas.
However dam planning and building needs to be done in a more sustainable way that takes into account national development priorities, the needs of local people and the impacts on natural habitats. In remote rural areas, such as in Zamfara state in Nigeria, local people hope that dam-building will have positive impacts on their lives, including access to electricity, irrigation, employment, roads and social services. The reality after a dam has been constructed is however often different. Local communities affected by the Bakun, Bui and Kamchay dams in Malaysia, Ghana and Cambodia report how their livelihoods and access to natural resources have declined, how they are struggling to make a decent living and feed their families. At the Bakun and Bui dams, local people have been displaced and resettled. At the Kamchay dam, some local people affected by the dam do not have electricity access. At the same time, national institutions such as local government authorities, and Chinese dam-builders and financiers are often unaware of the full extent of the local social and environmental impacts of these dams. With regards to environmental impacts, a wide difference in environmental management exists between dams. Some cases have been reported where Environmental Impact Assessments (EIAs) and mitigation actions to reduce the impacts on wildlife have been conducted to a relatively high standard, for example at the Bui dam in Ghana. At the same time, a separate governing institution to address the management and impact of the dam has been set up. Our research finds that the corporate behavior of Chinese dam-builders is to a large extent influenced by the national legislations, policies and practices set by the national governments in Africa and Asia. Also, international public institutions and industry bodies, such as the World Bank and the International Hydropower Association IHA, can provide international standards for corporate behavior in the hydropower sector. By working together, Chinese dam-builders and financiers, national host governments, and international public institutions and regulatory bodies can help to make the hydropower sector more sustainable.
The case studies
Bakun dam, Malaysia: Generating capacity: 2,400MW, estimated cost: US$2.6 billion. The financiers are thought to be ExIm Bank, while the developers are the Malaysia-China Hydro JV consortium composed of Malaysian Sime Darby, Sinohydro and others. Sinohydro is the builder. The dam operator is the Malaysian utility company Sarawak Hidro.
Bui dam, Ghana: Generating capacity: 400MW, estimated cost: US$621 million. The financiers are China’s ExIm Bank and the Ghana Government, the builder is Sinohydro and the developer is the Ghana Government.
Kamchay dam, Cambodia: Generating capacity: nearly 200MW, estimated cost: US$280 million. The financiers are ExIm Bank, while the builders, developers and contractors are Sinohydro.
Zamfara dam, Nigeria: Generating capacity: 100MW, estimated cost: app. US$160 million. The financiers are ExIm Bank, while the builders, developers and contractors are China Geo-Engineering Corporation. Not built yet.
Some of the most contentious socio-economic impacts of large dams are displacement and resettlement experienced by the affected local population. For the Bakun dam, about 10,000 indigenous people were forced to resettle. Traditionally, they lived by the river banks and hunted in the surrounding forest, some were semi-nomads. The dam construction forced them off their customary land into new sedentary settlements, far away from the river, surrounded by oil palm plantations and logging activities. For resettled subsistence farmers at the Bui dam the less fertile, small plots of land given as compensation pose a threat to food security and livelihoods. At the Kamchay dam the dam’s biggest socio-economic impact is on poor bamboo collectors who produce baskets from the bamboo they used to collect in the forests flooded by the dam’s reservoir. Since the dam construction many locals have seen sharp declines in their livelihoods and some took micro-credits from NGOs and financial institutions. Lack of access to natural resources such as forests, land and rivers, and hence a decline in people’s traditional livelihoods has led to a monetarisation of their lives, sometimes without providing alternative options such as local employments, training and adequate schooling.
Some dams are being built in protected habitats or areas of outstanding natural value, including the Kamchay and Bui dams that were built in Bokor National Park, Cambodia and Bui National Park, Ghana and the Bakun dam that was built in the tropical rainforest of Borneo, Sarawak, East Malaysia. These areas are home to endangered and/or endemic species such as the black hippopotamus (Bui), the Asian elephant (Kamchay) and the orangutan (Bakun). Dam construction, flooding the reservoir area and building access roads destroys the habitat of these species and other animals and plants. Other well documented impacts of large dams are hydrological changes including river flow alterations, changes in water quality, impacts on aquatic life –most importantly fish species, greenhouse gas emissions from decaying organic material in the reservoir etc.
Legal and political considerations
There are two predominant types of contracts for large dams: BOT (Build, Operate, Transfer) and EPC (Engineering, Procurement and Construction) contracts. While EPC contracts are common for large dams, BOT contracts are often in place where national expertise in dam-building is lacking. This was the case for the Kamchay dam, Cambodia’s first large dam. The BOT contract states Sinohydro will operate the dam for 44 years after which the dam will be transferred to Cambodian authorities. Local engineers and authorities need to be trained by dam-builders to take over the management and responsibility for the dam in the long-term. Also, the role of the national host government determines corporate behavior of overseas dam-builders. In countries where social and environmental legislations are in place and strictly followed, such as Environmental Impact Assessments (EIA), dam-builders are more likely to follow best practice. The EIA for the Bui dam was evaluated by experts as being of high quality and conducted by an international consultancy. Contrary, the EIAs for the Kamchay dam and Bakun dam were sketchy and not easily accessible to the public. For the Kamchay dam the full EIA approval was granted several months after the dam was already in operation, which hardly left any choice of alternatives. There are also local political risks. The Zamfara dam in Nigeria was driven forward by the former governor of Zamfara state. After the elections the political powers changed and a new governor has been appointed who has little interest in the dam. This also means China Geo- Engineering Corporation, who were planning to build the dam, faced considerable investment risks and difficult negotiations caused by national and local political instability.
The need for social safeguards
Hydropower dams can have many positive impacts, such as energy provision, helping to increase energy access, increasing national energy security, contributing to climate change mitigation, flood control, potential for improved irrigation, employment creation, opportunities for technology transfer etc. However this project’s research found that large dams often disproportionally affect the rural poor, including indigenous people. Tens of millions of people have been displaced because of large dams world-wide. For those people directly affected by dams, loss of access to natural resources such as fertile land, forests and water puts an additional strain on lives and livelihoods. At the same time, few of the affected people have access to considerable assets, formal employments, education and training. We therefore suggest that dam-builders and national governments need to put in place social safeguards to support the lives and livelihoods of the people directly affected by dams. This could include offering education, training and employment (for example as technicians, dam engineers or administrators) to people affected by dams. In addition, compensation payments should be longer term. Instead of one lump sum, compensation could be paid out as smaller sums over a longer period of time or partly paid as food subsidies. Along these lines, some valuable lessons have been learned in Sarawak, Malaysia for newly-built dams (e.g. Murum) after the challenges with the Bakun dam. Land-for-land compensation is preferable as it helps poor people being self-sufficient and contributes towards their food security. The quality and size of compensated land should be at least equal to people’s land before the dam construction. Customary land rights should be recognized. In addition, we recommend that electricity access and competitive electricity prices should be available to people affected by dams. Also, affected people should have the right to participate in decision-making as negotiating partners and downstream-affected people need to be entitled to compensation for their losses.
Protecting the environment
While large dams are considered a low carbon energy source, it is undisputed that they have major impacts on the natural environment. This project’s research found large discrepancies between dams in the way EIAs were conducted, managed, approved and monitored. We suggest that national governments have strict EIA legislations in place, in addition to robust impact mitigation and ecological protection measures for large dams e.g. wildlife rescue operations, afforestation schemes. Funding should be set aside and funding access rules should be clearly identified to enable the implementation of mitigation measures. We recommend that no dam developments take place in national parks, other protected areas or areas that are the habitat of endangered species.
The role of national host governments and local politics
The sustainability of hydropower projects can be increased by having robust national legislations and policies in place. Our research found that having a national governing body in place for managing the dam and monitoring its impacts can be beneficial, such as at the Bui Power Authority. At the same time, investments in countries with instable political systems bear a huge investment risk, as the Zamfara dam in Northern Nigeria shows.
International standards for sustainable corporate behavior
International guidelines, standards, policies and assessment tools to increase the sustainability of the hydropower sector include the World Bank / International Financial Corporation (IFC) standards, the IHA’s Hydropower Sustainability Assessment Protocol, the recommendations of the World Commission on Dams and the Equator Principles for financial institutions. The problem is that often dam-builders and financiers do not follow these. We suggest that dam-builders ensure that their projects adhere to these standards to increase the sustainability of corporate behaviour in the hydropower sector.
Alternative energy options
Yet, there are opportunities: China is not only leading the global large dams sector, it is also a global leader in other low carbon energy technologies, such as wind energy, solar energy and small hydropower. Wind energy, solar energy and small hydro are much more socially acceptable, environmentally-friendly and cost-effective than large dams while at the same time helping to increase energy access for local people, including the rural poor. Investing more in overseas wind, solar and small hydro in Asia, Africa and elsewhere could enable Chinese firms to access new markets, develop first-mover advantages, create employments and raise tax revenues while at the same time supporting national governments to increase modern energy access, reduce energy poverty and contribute to energy security, without causing severe environmental and social impacts.
Articles / Journal publications
- Urban, Frauke and Zhou, Yuan and Nordensvard, Johan and Narain, Ankita (2015) 'Firm-level technology transfer and technology cooperation for wind energy between Europe, China and India: From North–South to South–North cooperation?' Energy for Sustainable Development, 28 (10). pp. 29-40.
- Urban, Frauke (2015) Environmental innovation for sustainable development: the role of China. Sustainable Development, 23 (7-8). pp. 203–205.
- Urban, Frauke and Siciliano, Giuseppina and Sour, Kim and Lonn, Pich Dara and Tan-Mullins, May and Mang, Grace (2015) South-South technology transfer of low carbon innovation: Chinese large hydropower dams in Cambodia. Sustainable Development, 23 (7-8). pp. 232–244.
- Nordensvard, Johan and Urban, Frauke and Mang, Grace (2015) Social innovation and Chinese overseas hydropower dams: The nexus of national social policy and Corporate Social Responsibility. Sustainable Development, 23 (7-8). pp. 245-256.
- Siciliano, Giuseppina and Urban, Frauke and Sour, Kim and Pich, Dara Lonn (2015) 'Hydropower, social priorities and the rural–urban development divide: The case of large dams in Cambodia.' Energy Policy, 86 . pp. 273-285.
- Urban, Frauke and Nordensvard, Johan and Siciliano, Giuseppina and Li, Binqin (2015) Chinese Overseas Hydropower Dams and Social Sustainability: The Bui Dam in Ghana and the Kamchay Dam in Cambodia. Asia & the Pacific Policy Studies, 2 (3). pp. 573-589.
- Urban, Frauke Chinese dams go global: opportunities for more sustainable hydropower. London: CeDEP. SOAS, University of London.
- Urban, Frauke (2014) 'China goes global.' International Innovation Environment Report, , 159 . pp. 83-85.
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