High-risk water infrastructure at any cost

23 November 2006

After a decline in the late 90s, World Bank lending for water projects has been rapidly increasing over recent years, reaching $1.8 billion in FY05, and is set to continue. The Bank is the largest external financier in this sector. At the world water forum in Mexico in March, Kathy Sierra, vice president for infrastructure said that the Bank had “learnt from past mistakes and has been supporting…socially and environmentally sound infrastructure”. Projects in South Asia and sub-Saharan Africa suggest otherwise. Projects in South Asia and Sub-Saharan Africa suggest otherwise.

Pakistan reparations

A recent investigation by the World Bank Inspection Panel has found that the World Bank-funded water projects in Pakistan, the National Drainage Program (NDP) and Left Bank Outfall Drainage project (see Update 52) have led to widespread environmental harm and suffering among local communities. The projects have contributed to deadly floods, and violate- either fully or partially- six of the Bank’s safeguard policies on environmental assessment, natural habitats, indigenous peoples, involuntary resettlement, project supervision and disclosure of information.

The World Bank approved $285 million for the NDP in 1997. The project was supposed to improve drainage in Pakistan’s irrigation system in order to address salinisation and waterlogging. The Inspection Panel reported that the alignment of the drainage canals was “technically and environmentally risky”, and “technical mistakes were made during the design” of the canals. Consequently “increased salinity has affected large tracts of agricultural lands” and the failure of the drainage infrastructure “has led to major harm to the ecosystem, wildlife and fisheries”. Increased flooding, which was partially caused by the project, claimed more than 300 lives in 2003.

The projects have contributed to deadly floods, and violate six of the Bank's safeguard policies

Bank management has accepted that some mistakes were made but ultimately asserts that the “Bank was diligent in the application of its policies and procedures during implementation of the NDP”. Affected communities, and NGOs ActionAid Pakistan and International Rivers Network (IRN), have requested that the Bank pay reparations to address the grievances of the affected people, and stop financing large dam and canal projects in Pakistan.

More than 1,000 affected people met in the project region at the beginning of October and put forward a list of 13 demands. According to Mustafa Talpur of ActionAid Pakistan, “there must be a comprehensive plan for protection, promotion and restoration of livelihood sources such as agriculture land, livestock, fisheries, grazing areas and forests”. The affected people also demanded that alternative drainage options must be identified with the full participation of the affected communities, and that the loan amount be converted into a grant, and the proceeds spent for reparations to the affected communities.

The Bank’s most recent Country Assistance Strategy for Pakistan reveals plans to increase lending for the country’s water sector ten-fold during the 2006-09 period and to invest in new, contentious large dam projects.

Laos: inadequate compensation

During a June visit to the project site, staff members from IRN witnessed numerous concerns relating to the Nam Theun 2 dam (see Updates 45,48). IRN observers found that provisional cash compensation provided to affected communities for loss of land, rice fields and common property resources has been wholly inadequate to compensate for the lost production values. In addition, many resettled villagers are currently living in temporary housing and suffering water shortages because boreholes have not yet been dug. Other concerns include:

  • no clear management plan for logging operations;
  • damage to fish stocks in the reservoir area and downstream;
  • excessive dust in roadside villages;
  • threats to two nearby national biodiversity conservation areas; and
  • delays in the release of studies relating to social and environmental aspects of the project.

IRN also discovered that the Lao national hydropower policy, enacted in June 2005 and a precondition for World Bank support, is not being properly implemented. The policy includes requirements for a full environmental impact assessment and management plan, and compensation for all those affected.

Despite this, the World Bank recently expressed satisfaction with the overall progress of the project despite a delay at the start due to serious weather conditions. On the release of the latest semi-annual update on implementation Ian Porter, World Bank country director for South East Asia declared that: “The construction of the project is now on track to meet some of the key expectation needs including the date for filling the reservoir within 2008 and the date of beginning of commercial operation on December 2009.”

“Dirty like diesel”

As part of a renewed push to boost energy investment in Sub-Saharan Africa (see page 7), the World Bank has stated that Africa must double its investments in power generation if it is to ease chronic blackouts and extend electricity from a quarter to half of its population. The clean energy investment framework states that donors will need to double investments from $2 billion to $4 billion a year. Jamal Saghir, director for energy and water in the World Bank Group’s private sector development and infrastructure vice presidency has rejected NGO reports of the environmental and social devastation that large hydro can cause: ‘You can not tackle the issue of [energy] access in Africa only with small projects, even if some of them are dirty like diesel (powered generation)’.

In October Juan Jose Daboub, World Bank managing director, stated that the Bank is working with the Ugandan government to obtain technical assistance for the contentious Bujagali hydropower plant (seeUpdates 28, 47), for which it removed its support in 2003 following a corruption investigation and the withdrawal of the main sponsor, US-based AES Corporation. The World Bank is also considering providing $200 million for revamping the Inga hydropower station in the Democratic Republic of Congo (DRC) by the end of the year. Much of the electricity would be exported to South Africa, despite the lack of energy access in the DRC, still reeling from years of civil conflict. The World Bank has been investigated by its own accountability bodies for its involvement in the forest and mining sectors of the country on the grounds of corruption, human rights abuses and the destruction of biodiversity.