Three Ways to Do Hydropower Better
Sustainable hydropower development can be done better. Experts agree that three areas needing improvement are addressing environmental and social risks upfront, improving sustainable lending, and strengthening regional cooperation.
“Hydropower companies will come out ahead of the game if they address their risks upfront,” said Pablo Cardinale, IFC Senior Environment Specialist, speaking at the 2015 World Hydropower Congress in Beijing in May. “We want companies to manage their risks better so we can help the sector catch on to the idea that sustainability is achievable.”
The benefits of developing hydropower sustainably are already apparent to the many companies and organizations that prioritize more sustainable development and are seeing their efforts pay off. Raising the bar in sustainability not only improves a company’s reputation, lowers environmental impact, and strengthens community relations, it also attracts investors and improves business performance.
Governments are also promoting more sustainable hydropower through new laws and policies to help mitigate the significant risks that all hydropower projects carry because of construction costs and environmental and social impact.
But more can be done. Cardinale’s presentation made the point that addressing environmental and social risks upfront is the top must-do for improving sustainable hydropower development. While the opportunities are great, hydropower development poses complex challenges and risks that must be managed from the start. He explained the options for companies looking to tackle project risks in the planning phase by using international benchmarks such as the Equator Principles and IFC’s Performance Standards.
Creating more sustainable lending is the second step to doing hydropower better. In the short term, lenders may find hydropower investments less attractive than other infrastructure projects due to high upfront capital costs. IFC wants to help financiers interested in investing in hydropower lower their risks by improving hydropower companies’ environmental and social management systems and helping them to adopt optimal environmental and social guidelines. At the congress, participants called on governments, multilateral organizations, and civil society to do hydropower better by lowering the environmental and social risks involved.
The third area that requires improvement is regional cooperation. With 260 of the world’s rivers crossing at least one national boundary, the future of sustainable hydropower development will rely on cooperation with stakeholders from neighboring countries. Improved regional cooperation will support sustainability by addressing environmental issues such as transboundary river basin management and the cumulative impacts of development. Likewise, a focus on regional cooperation will help ensure benefit-sharing and meeting the local needs of countries that purchase the power.
“Developing hydropower solely for the purpose of exporting when the domestic needs are not being met will not result in a fully positive outcome,” said Kate Lazarus, IFC Senior Operations Officer based in Vientiane. “We need to consider this now.”
Effective mechanisms are needed to build regional cooperation that includes the views and opinions of multiple stakeholders. As Lazarus discussed in a session on regional development, local stakeholders want to ensure that their natural resources are not mismanaged while governments expect hydropower projects to contribute to the economy. Investors are concerned about changes in politics and policy that affect accountability and profitability.
“Affected communities expect and deserve engagement and protection from the negative impacts of development,” Lazarus said. “There is a need to minimize the social and environmental impact on rivers through a shared strategic plan that includes the voices of multiple stakeholders.”
