Should We Build More Large Dams? The Actual Costs of Hydropower Megaproject Development

By A. Ansar, Bent Flyvbjerg, Alexander Budzier, Daniel Lunn. 2014

713 citations recorded by the source corpus.

A brisk building boom of hydropower mega-dams is underway from China to Brazil. Whether benefits of new dams will outweigh costs remains unresolved despite contentious debates. We investigate this question with the “outside view” or “reference class forecasting” based on literature on decision-making under uncertainty in psychology. We find overwhelming evidence that budgets are systematically biased below actual costs of large hydropower dams—excluding inflation, substantial debt servicing, environmental, and social costs. Using the largest and most reliable reference data of its kind and multilevel statistical techniques applied to large dams for the first time, we were successful in fitting parsimonious models to predict cost and schedule overruns. The outside view suggests that in most countries large hydropower dams will be too costly in absolute terms and take too long to build to deliver a positive risk-adjusted return unless suitable risk management measures outlined in this paper can be affordably provided. Policymakers, particularly in developing countries, are advised to prefer agile energy alternatives that can be built over shorter time horizons to energy megaprojects.

Subfields: Global and Planetary Change, Ocean Engineering, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/acde931de88d97ea98285f0a55255917da166d4c

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Citations in the corpus

The Principle of the Malevolent Hiding Hand; or, the Planning Fallacy Writ Large (2015, positive): “…and the economies where they are built are fragile, just one major project gone wrong can negatively affect the national economy for decades, as Brazil and Pakistan have learned with their large-dams projects (Ansar et al. 2014), and Greece with the 2004 Olympics (Flyvbjerg and Stewart 2012 ).”
Does Infrastructure Investment Lead to Economic Growth or Economic Fragility? Evidence from China (2016, positive): “The micro-level literature is based on evidence from project-level case studies and larger datasets of actual outcomes of infrastructure mega-projects in terms of cost, time, and benefit performance (Flyvbjerg et al ., 2002, 2003, 2005, 2009; Flyvbjerg and Budzier, 2011; Ansar et al. , 2014).”
Sustainable water management under future uncertainty with eco-engineering decision scaling (2016, background): “To examine these trade-offs, we modelled engineering and ecological performance metrics over a range of future climates, subject to four hypothetical management options: (1) maintain status quo (SQ), that is, current levee height and reservoir operating rules; (2) re-operate the reservoir (RR) by mo”
Power plants as megaprojects: Using empirics to shape policy, planning, and construction management (2015, neutral): “Ansar et al. (2014) analysing a sample of 245 large dams (including 26 major dams) built between 1934 and 2007 found that actual costs were on average 96% higher than estimated costs and actual implementation schedule was on average 44% (or 2.3 years) higher than the estimate.”