We are not doing a true cost-benefit analysis of hydropower dams in India - Interview with Dr. Bharat Jhunjhunwala

Dr. Bharat Jhunjhunwala,

His latest book, ‘Economics of River Flows: Lessons from Dam Removals from America’ analyses dam decommissioning examples from the United States and raises some pertinent questions about costs benefit analysis of dams in India. His earlier book, ‘Economics of Hydropower’ raised questions about economic efficiency, viability and sustainability of Hydropower Dams in India.

Parineeta Dandekar, IWP,

Dr. Bharat Jhunjhunwala

bharatjj@gmail.com

1. 

In your recent book, Economics of River Flows, you raise some pertinent questions about the EIA and cost benefit analysis of hydropower dams in India. Could you please share your views with us?

The basic point learnt by me from the study of dam removals is that we are not doing true and correct Cost-Benefit Analysis of hydropower dams. The benefits from generation of electricity are grossly overstated while the costs of generation are understated. Most hydro projects will be proven to be unviable once these corrections are made. Presently there is a huge lobby of Power Ministry, Contractors and rich consumers that is ensuring that such true CBA is not done. These lobbies stand to gain even though the country stands to loose. These groups are pushing the country into an abyss by pushing unviable projects for their gain.

 Parbati stage II Project in Himachal Pradesh  Photo: with thanks from Kalpavriksha

Table 1. From Dr. Jhunjhunwala’s Book, Economics of Hydropower, 2009

2. Do you think that the current EIA procedures represent the true value of rivers? In your view, what are the crucial use and non use values which need to be included in our EIAs and what are the perils of neglecting these?

The purpose of making dam is, ultimately, welfare of the people. Welfare is a holistic concept. Income and consumption is desirable only because it provides satisfaction and happiness. So, making of dams has two opposite effects. It directly hits at welfare by depriving some people of their livelihoods and some people of the satisfaction of seeing the free flow of rivers and the cultural and spiritual well being. On the other hand it provides more satisfaction from consumption of electricity. The net result could be either way. Therefore, a dispassionate assessment of the aesthetic, cultural and spiritual values is necessary. 

Table 2: Benefits and costs of Kotlibhel 1B (Rs crore/year)

( From the book: Economics of Hydropower)

Authors note: Admittedly, these estimates are dependent on many assumptions made by the author. The author’s basic objection is that the costs enumerated above are ignored by those who support hydropower.

Second aspect ignored is that of biodiversity. EIAs make a list of endangered species that may be affected. But biodiversity is much more than this. Intra-species variations in genes are not looked at. Secondly, where endangered species are found, cosmetic arrangements are made for helping the endangered species to survive. These mostly do not work.

In ignoring these values is that we are actually harming welfare of the people and endangering survival of this living world.

3. 

You have expounded upon USA’s experience with Dam Decommissioning. What are the important lessons to be learned from USA’s experience?

Important lesson for the developing countries is to undertake true CBA right away. They will be squandering huge resources in making the dams which they may pay to remove later.

4. 

The last remaining free flowing rivers in India are succumbing to developmental pressures. What, in your view, is the importance of these rivers? You have said that with more and more dams being built, the ‘scarcity’ value of free flowing rivers is increasing exponentially.

Free flowing stretch of a river Tunga in Western Ghats Photo: Harish Banugondi

5. Could you share your experiences of interacting with the pilgrims at Haridwar and calculating the WTP for decommissioning and freshwater flows?

First we asked the pilgrims how much they value taking bath in the Ganga in money terms.  Many refused to give a number. Others said its was ‘invaluable’ or ‘priceless’. But nearly one-half put a money value on the bath.

Worshipping River Ganga at Haridwar. Photo: with thanks from http://www.pbase.com/clodreno/image/

6. 

What, in your opinion, are the important steps to be taken to ensure environmental flows or freshwater flows in rivers?

Chalakudy River where the Athirappilly Hydel Project is planned in Kerala Photo: Latha Anantha

7. But In rivers like Krishna where nearly all the runoff is used by various competing users (consumptive use), how do we ensure freshwater flows in rivers?

This approach assumes that there are no absolute values such a spiritual or biodiversity involved. This economic calculation is not relevant where such absolute values are involved.

8. In the end, what are the ways in which true value of natural resources can be included in the current economic discourse? Do you see this happening in coming years?