IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v14y2021i9p2673-d549714.html
   My bibliography  Save this article

The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975–2015

Author

Listed:
  • Saule Baurzhan

    (Department of Economics, Eastern Mediterranean University, Famagusta 99450, Turkey)

  • Glenn P. Jenkins

    (Department of Economics, Queen’s University, Kingston, ON K7L 3N6, Canada)

  • Godwin O. Olasehinde-Williams

    (School of Economics and Management, Nanchang University, Nanchang 330031, China)

Abstract

This paper assesses the economic benefits of 57 World Bank Group-sponsored hydropower dam plant investments. Hydropower dams are among the main sources for producing electricity and the largest renewable source for power generation throughout the world. Hydropower dams are often a lower-cost option for power generation in Clean Energy Transition for addressing global climate change. Despite its conspicuous aspects, constructing hydropower dams has been controversial. Considering the World Bank’s long history as the largest hydropower development financier, this study investigates its performance in supporting hydropower dams. The outcomes of this study apply to the wider hydropower development community. Of the projects in this study, 70% experienced a cost overrun, and more than 80% of projects experienced time overruns, incurring potential additional costs as a result. Despite the high cost and time overruns, this hydropower portfolio of dams produced a present value of net economic benefits by 2016 of over half a trillion USD. Based on our findings, the evaluated hydropower portfolio helped avoid over a billion tonnes of CO 2 for an estimated global environmental benefit valued at nearly USD 350 billion. The projects’ additional environmental benefits raise the real rate of return from 15.4% to 17.3%. The implication for hydropower developers is that the projects’ assessment should consider cost and time overrun and factor them into the project-planning contingency scenarios. There is a considerable benefit for developing countries to exploit their hydropower resources if they can be developed according to industry practices and international standards. The case for developing hydropower may be stronger when considering its climate benefits. The net economic benefits of hydropower can be even higher if there is a greater effort to manage cost and time overruns.

Suggested Citation

  • Saule Baurzhan & Glenn P. Jenkins & Godwin O. Olasehinde-Williams, 2021. "The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975–2015," Energies, MDPI, vol. 14(9), pages 1-22, May.
  • Handle: RePEc:gam:jeners:v:14:y:2021:i:9:p:2673-:d:549714
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/14/9/2673/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/1996-1073/14/9/2673/
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jamasb, Tooraj & Nillesen, Paul & Pollitt, Michael, 2004. "Strategic behaviour under regulatory benchmarking," Energy Economics, Elsevier, vol. 26(5), pages 825-843, September.
    2. Awojobi, Omotola & Jenkins, Glenn P., 2015. "Were the hydro dams financed by the World Bank from 1976 to 2005 worthwhile?," Energy Policy, Elsevier, vol. 86(C), pages 222-232.
    3. Cantarelli, C.C. & Flyvbjerg, B. & Buhl, S.L., 2012. "Geographical variation in project cost performance: the Netherlands versus worldwide," Journal of Transport Geography, Elsevier, vol. 24(C), pages 324-331.
    4. Chris Head, 2000. "Financing of Private Hydropower Projects," World Bank Publications - Books, The World Bank Group, number 15190.
    5. Dursun, Bahtiyar & Gokcol, Cihan, 2011. "The role of hydroelectric power and contribution of small hydropower plants for sustainable development in Turkey," Renewable Energy, Elsevier, vol. 36(4), pages 1227-1235.
    6. Cantarelli, C.C. & van Wee, B. & Molin, E.J.E. & Flyvbjerg, B., 2012. "Different cost performance: different determinants?," Transport Policy, Elsevier, vol. 22(C), pages 88-95.
    7. Aslan, Yilmaz & Arslan, Oguz & Yasar, Celal, 2008. "A sensitivity analysis for the design of small-scale hydropower plant: Kayabogazi case study," Renewable Energy, Elsevier, vol. 33(4), pages 791-801.
    8. Ansar, Atif & Flyvbjerg, Bent & Budzier, Alexander & Lunn, Daniel, 2014. "Should we build more large dams? The actual costs of hydropower megaproject development," Energy Policy, Elsevier, vol. 69(C), pages 43-56.
    9. Atilgan, Burcin & Azapagic, Adisa, 2016. "Renewable electricity in Turkey: Life cycle environmental impacts," Renewable Energy, Elsevier, vol. 89(C), pages 649-657.
    10. Bacon, Robert W & Besant-Jones, John E, 1998. "Estimating construction costs and schedules: Experience with power generation projects in developing countries," Energy Policy, Elsevier, vol. 26(4), pages 317-333, March.
    11. Nouni, M.R. & Mullick, S.C. & Kandpal, T.C., 2006. "Techno-economics of micro-hydro projects for decentralized power supply in India," Energy Policy, Elsevier, vol. 34(10), pages 1161-1174, July.
    12. Glenn Jenkins & RICHARD ZUKER, 1984. "Blue Gold: Hydro-Electric Rent In Canada," Development Discussion Papers 1984-01, JDI Executive Programs.
    13. Karlis, Athanassios D & Papadopoulos, Demetrios P, 2000. "A systematic assessment of the technical feasibility and economic viability of small hydroelectric system installations," Renewable Energy, Elsevier, vol. 20(2), pages 253-262.
    14. Tahseen, Samiha & Karney, Bryan W., 2017. "Reviewing and critiquing published approaches to the sustainability assessment of hydropower," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 225-234.
    15. Head, C., 2000. "Financing of Private Hydropower projects," World Bank - Discussion Papers 420, World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jenkins, G. & Olasehinde-Williams, G. & Baurzhan, S., 2022. "Is there a net economic loss from employing reference class forecasting in the appraisal of hydropower projects?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).
    2. Herve Kabanda & Alex Romard & Fuze Yurtsever & Anjali Wadhera & Joshua Andrews & Craig Merrett, 2021. "Construction Time Estimation Function for Canadian Utility Scale Power Plants," Energies, MDPI, vol. 14(17), pages 1-16, August.
    3. Olasehinde-Williams, Godwin & Jenkins, Glenn P., 2023. "A Test of Hirschman’s Hiding Hand Principle in World Bank-Financed Hydropower Projects," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 14(2), pages 298-317, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Saule Baurzhan & Glenn Jenkins & Godwin O. Olasehinde-Williams, 2021. "The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975–2015," Working Paper 1463, Economics Department, Queen's University.
    2. Awojobi, Omotola & Jenkins, Glenn P., 2015. "Were the hydro dams financed by the World Bank from 1976 to 2005 worthwhile?," Energy Policy, Elsevier, vol. 86(C), pages 222-232.
    3. Glenn P. Jenkins & Saule Baurzhan & Author-Name: Godwin O-Williams, 2018. "Evaluation of the Economic Performance of Hydropower Developments Supported by the World Bank Group 1975 to 2015," Development Discussion Papers 2018-06, JDI Executive Programs.
    4. Anuja Shaktawat & Shelly Vadhera, 2021. "Risk management of hydropower projects for sustainable development: a review," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 45-76, January.
    5. Wasiu Olayinka FAWOLE & Burhan ÖZKAN, 2017. "Identifying the Drivers of Food Security Based on Perception among Households in South Western Nigeria," European Journal of Interdisciplinary Studies Articles, Revistia Research and Publishing, vol. 3, ejis_v3_i.
    6. Olasehinde-Williams, Godwin & Jenkins, Glenn P., 2023. "A Test of Hirschman’s Hiding Hand Principle in World Bank-Financed Hydropower Projects," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 14(2), pages 298-317, July.
    7. Jenkins, G. & Olasehinde-Williams, G. & Baurzhan, S., 2022. "Is there a net economic loss from employing reference class forecasting in the appraisal of hydropower projects?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 159(C).
    8. Mishra, Sachin & Singal, S.K. & Khatod, D.K., 2011. "Optimal installation of small hydropower plant—A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(8), pages 3862-3869.
    9. Miranda Sarmento, J.J. & Renneboog, Luc, 2017. "Cost overruns in public sector investment projects," Other publications TiSEM 51799a3e-4c78-4dbd-b330-b, Tilburg University, School of Economics and Management.
    10. Flyvbjerg, Bent & Ansar, Atif & Budzier, Alexander & Buhl, Søren & Cantarelli, Chantal & Garbuio, Massimo & Glenting, Carsten & Holm, Mette Skamris & Lovallo, Dan & Lunn, Daniel & Molin, Eric & Rønnes, 2018. "Five things you should know about cost overrun," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 174-190.
    11. Kirchherr, Julian & Ahrenshop, Mats-Philip & Charles, Katrina, 2019. "Resettlement lies: Suggestive evidence from 29 large dam projects," World Development, Elsevier, vol. 114(C), pages 208-219.
    12. Miranda Sarmento, J.J., 2014. "Public private partnerships," Other publications TiSEM c7d4c978-234c-4f88-83ed-1, Tilburg University, School of Economics and Management.
    13. Dogmus, Özge Can & Nielsen, Jonas Ø., 2019. "Is the hydropower boom actually taking place? A case study of a South East European country, Bosnia and Herzegovina," Renewable and Sustainable Energy Reviews, Elsevier, vol. 110(C), pages 278-289.
    14. A. Richard Swanson & Vivek Sakhrani, 2023. "Value–Risk Calculator for Blended Finance: A Systems Perspective of the Nachtigal Hydropower Project," Sustainability, MDPI, vol. 15(13), pages 1-22, June.
    15. Oyewo, Ayobami Solomon & Solomon, A.A. & Bogdanov, Dmitrii & Aghahosseini, Arman & Mensah, Theophilus Nii Odai & Ram, Manish & Breyer, Christian, 2021. "Just transition towards defossilised energy systems for developing economies: A case study of Ethiopia," Renewable Energy, Elsevier, vol. 176(C), pages 346-365.
    16. Yi, Choong-Sung & Lee, Jin-Hee & Shim, Myung-Pil, 2010. "Site location analysis for small hydropower using geo-spatial information system," Renewable Energy, Elsevier, vol. 35(4), pages 852-861.
    17. Kumar, Deepak & Katoch, S.S., 2014. "Harnessing ‘water tower’ into ‘power tower’: A small hydropower development study from an Indian prefecture in western Himalayas," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 87-101.
    18. Love, Peter E.D. & Ika, Lavagnon A. & Ahiaga-Dagbui, Dominic D., 2019. "On de-bunking ‘fake news’ in a post truth era: Why does the Planning Fallacy explanation for cost overruns fall short?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 126(C), pages 397-408.
    19. Laghari, J.A. & Mokhlis, H. & Bakar, A.H.A. & Mohammad, Hasmaini, 2013. "A comprehensive overview of new designs in the hydraulic, electrical equipments and controllers of mini hydro power plants making it cost effective technology," Renewable and Sustainable Energy Reviews, Elsevier, vol. 20(C), pages 279-293.
    20. Atif Ansar & Bent Flyvbjerg & Alexander Budzier & Daniel Lunn, 2016. "Does infrastructure investment lead to economic growth or economic fragility? Evidence from China," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 32(3), pages 360-390.

    More about this item

    Keywords

    investment appraisal; carbon emissions; cost overrun; hydropower; dams; World Bank;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:14:y:2021:i:9:p:2673-:d:549714. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.