Economics of River Flows –Lessons from Dam Removals in America

Book review
Economics of River Flows –Lessons from Dam Removals in America
Bharat Jhunjhunwala
Book review by:
Biswajit Kumar
Second Year DPM Student
Specialisation: Finance

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The book ‘Economics of River Flows: lessons from Dam Removals in America’ by Dr Bharat Jhunjhunwala is an attempt to provide fact based arguments to prove irrefutably that dams doesn’t helps in securing economic growth rather the contrary.
The book is divided in five parts.
The first part discusses why dams are being removed in America. The two chapters are‘Problems of Dam removal’ and ‘Funding sources for Dam removal’.
The second part explores the examples of dam removals in America. The author analyses the topic in eight chapters ‘Economic analysis of removing four dams on the lower snake river’, ‘Non-use values lead to the removal of Elwha Dam’, ‘Removal of Edwards Dam’, ‘Removal of Embrey Dam’ ‘Denial for Wilkes-Barre Inflatable Structure’ and ‘The Motts run Water Treatment Plant’.
In the third part ‘Cost-Benefit Analysis of Hydropower Dams’ the author has devoted one chapter to Cost-Benefit Analysis, another to Economic value of Hydropower and the third one to ‘Critique of FERC’s approval to Klamath Hydroelectric Dam’.
The fourth part brings to light the Environmental Impacts of Hydropower Dams in the chapters named ‘Impacts of Hydro Dams on Environment’ , ‘Impact of Hydro Turbines on Water Quality’, ‘River- Continuum Concept’, ‘The Wild and Scenic Act and ‘ The wild and Scenic Act in Operations’.
The fifth part emphasizes on Economic values of free-flow of rivers in the chapters titled ‘Non-use Value of Free Flowing Rivers’, ‘Economic Values of Rivers’ and ‘Economic value of River Banks’.
In various chapters the author compares several economic analysis of dam removal in America vis-a vis dam construction in India and argues that dam removal has proved to be more beneficial because free flow of water does more good than generation of hydropower when economic cost of loss of fishing, recreation, biodiversity, etc are taken into consideration.
The uses of rivers for these alternate activities generate welfare directly by improving the quality of life. It also generates large incomes from these alternate activities.
It is considered that naked riverbanks do not provide any economic benefits. They are ‘unproductive’. The author provides us with insight that riverbanks actually clean the river waters. Similarly the assumption that water is not consumed while energy is harvested for productive purposes is refuted by the recent research which states that the living organisms develop to maximize the utilization of energy from the free flow of rivers. When energy is removed from water through hydropower dams, the other living beings are deprived of that energy. The free flow of river improves the water quality of the river and reduces the cost of water treatment facilities. The pressure inside turbines forces gases like methane into water in the form of bubbles. These bubbles can get into various parts of the body .Major fish kills have resulted from such super-saturation of gas. Consumption of downstream water can have similar effect on human beings. The maintenance and repairing cost is quite high along with the cost incurred to remove the sediments. The large number of embankments made for flood control leads to deposition of sediments in the river bed and raises the level of the same. This results in devastating flood, earthquakes and landslides, loss of soul due to displacement and even water-borne diseases such as malaria.
The author is of the view that non-quantitative costs and benefits are generally overlooked while doing a Cost-Benefit Analysis. The author illustrates how after the useful life of a dam is exhausted, the future generation inherits non-functional dams along with broken rivers. He makes a mention of ‘Scarcity value’ of natural resources. Once a cascade of dams is built on rivers, it leaves less free flow remaining that can be used for generation of yet more hydropower. The value of the remaining free flow increases as the availability reduces. This ‘depletion premium’ is not accounted in cost calculation.
The book proves to be a timely effort to elucidate the economic benefit being overstated in India by ignoring many costs of hydropower. As the writer points out “Dams are being built in India because economic analysis is flawed and ignores various costs that are surreptitiously passed on to the society. Hopefully the Indian planners will look at the lessons of dam removals in the United States.