DAMSWhy Building More Big Dams Could Be a Costly Gamble for Future Water Security and the Environment
Climate change and biodiversity loss are mounting threats to Australia’s water security. So we often hear calls for more dams. But is that the answer?
Climate change and biodiversity loss are mounting threats to Australia’s water security. So we often hear calls for more dams. But is that the answer?
Our recent research reveals large dam projects are costly gambles with public money. They often fail to deliver promised economic benefits. They also have major environmental, financial and social impacts.
In New South Wales, some members of the Lower Lachlan River community were concerned about plans to expand Wyangala Dam. They first asked us in 2020 to investigate its full costs and benefits, with findings presented at a local workshop in 2022.
The first WaterNSW estimate of capital and operating costs was A$620 million in 2018. Within a few years, it had soared to as much as $2.1 billion. In 2023, the project was scrapped because it wasn’t economically viable.
Similar concerns surround other projects overseas and in Australia, including Hells Gate Dam in Queensland, and Dungowan Dam and Snowy Hydro 2.0 in NSW.
To avoid repeating costly mistakes and mismanaging taxpayers’ money, we need a smarter approach to major water projects. This includes independent assessments and greater transparency, with business cases made public and decision-making open to scrutiny. And planning for climate change must become a priority.
Lessons from Past Mistakes
Inadequate economic assessments of big dam projects are a global problem. The Grand Ethiopian Renaissance Dam and India’s Subansiri Lower Hydroelectric Project promised big, but had rising price tags and devastating impacts on ecosystems.
In Australia and worldwide, big dam cost overruns can be up to 825%. The average overrun is 120%. This casts serious doubt on such projects’ financial and social viability. Public costs for private gains are a major concern.
Our study reviewed the original business case for the Wyangala Dam expansion. The original study had concluded there would be net social benefits and gave the project the green light.
Our review found the business case was seriously flawed. It overestimated benefits and grossly underestimated physical capital and environmental costs.
Estimated building costs blew out by 239%. If the project had gone ahead, the costs would undoubtedly have increased.
On top of this, assessments of impacts on rivers and wetlands were poor and superficial. They greatly undervalued the environmental effects of expanding the dam, particularly on downstream wetlands.
On the other side of the equation, its benefits were overblown, particularly for water security and agriculture.
