There are concerns that hydropower projects benefit cities and downstream populations more than the local people who bear the direct social and environmental costs. Transitioning to sustainable hydropower development is critical for climate resilience and meeting future energy needs.

By Nisha Wagle and Chimi Seldon

Hydropower will play a significant role in SouthAsia’s energy future, and demand is higher now than ever before. Since the vast potential of the region’s mighty and fast-flowing rivers is yet to be fully exploited, now is the time to focus on environmentally, socially and financially sustainable hydropower development.

Hydropower projects are complex. They are often large-scale, require high initial investment, are subject to market risks, and involve numerous stakeholders. Multiple environmental and social challenges require navigating during both construction and operation, and investors expect high rates of return.

When looking at the environmental, socioeconomic, financial, and technical domains in relation to achieving sustainable hydropower in the future, two key questions emerge: Are efforts being made (and plans being put in place) to mitigate potential negative impacts? Are these mitigation measures cost-effective?

We know that the environmental costs can be significant, and some of the environmental risks may be exacerbated by climate change. The social equity of hydropower development is also to be considered – there are concerns that hydropower projects benefit cities and downstream populations more than the local people who bear the direct social and environmental costs. Then there is the issue of cost competitiveness (compared to solar and wind), the ramifications of which should not be ignored. These should be considered together with the technical components – the design, site, and operational plan.

Environmental sustainability

Despite hydroelectricity being relatively clean energy, the construction and operation of hydropower projects can present several environmental challenges, and conversely, environmental and climate risks could hamper projects. Changes in land-use, modification of river flow regimes, and disruption of aquatic and terrestrial ecosystems are a few common impacts of hydropower development projects. On the other hand, multiple hazards prevalent in South Asia can impact project infrastructure and power production. The environmental risks are further exacerbated by climate change which brings with it increased extreme weather events as well as greate risks for glacial lake outburst other types of floods, landslides, sedimentation, and changes in the hydrological regime.

The disasters in Melamchi, Nepal and Uttarakhand, India in 2021 were wake-up calls and showed that we need to consider not just single but multiple hazards. Crucially, they showed that multiple hazards and cascading impacts, which are challenging to understand and predict, are becoming common in South Asia.

Environmental sustainability depends on how well the associated risks are identified and mitigated. Strict adherence to environmental impact assessment (EIA), including environmental risk assessment during the feasibility study and effective implementation of preventive measures and plans as well as compliance monitoring are prerequisites. There are proven measures from international and regional practices – through reliable climate and weather services and flow forecasting systems, for instance – towards a project’s sustainability, longevity, and optimised power production. Such practices enable analysing future environmental and climate risks. Likewise, watershed and land use management plans, installation of early warning systems, availability and effective implementation of policies and guidelines, and institutional arrangements and capacity building can be instrumental. Mitigation measures such as lowering reservoir levels and changing operation rules for sediment passage during flood season, for instance, can prevent downstream flooding and reduce sedimentation. Similarly, stringent rules for maintaining environmental flows and encouraging developers to construct fish ladders will allow aquatic species to sustain. There is a crucial need for the hydropower industry to work with environmental scientists to develop more solutions, including nature-based ones.

Social sustainability

Social justice is a critical concern in the development of large-scale water infrastructure. Though the benefits of hydropower are large, local communities – who bear the social costs in terms of resettlement and changes in their cultural landscape and the environmental costs in terms of land degradation, water quality issues, and pollution – may not necessarily reap the rewards.

It is imperative that hydropower developers and stakeholders take local needs into consideration. The adoption of a royalty mechanism, which would ensure locals receive a cut of the monetary profits; equity securities, which would ensure ownership in the concerned hydropower project; rural electrification; and employment opportunities are some means to address social concerns. Additionally, facilities such as road access and drinking water availability, job opportunities, and capacity-building initiatives help local communities.

Financial sustainability

The financial sustainability of hydropower is often considered only in terms of revenue generation. The environmental and social risks and their cost implications are seldom taken into account. And while hydropower is currently cheaper than other renewable energy sources, this scenario is changing. By 2040, solar energy is projected to overtake coal to become the biggest energy generator globally. To compensate for the variability in energy generation, at least 50 per cent of the energy share in South Asia (where 75 per cent of hydropower potential remains unexploited) can come from hydroelectricity. While hydroelectricity is not subject to diurnal variations and can be stored, ensuring its competitiveness with other reliable energy sources will require the minimisation of environmental and social risks as well.

Thorough feasibility studies for each project would help identify and manage these risks, reduce project life cycle costs, increase returns, and optimise results overall. For this, we would need fit-for-purpose institutional, market, and financing arrangements; power purchase agreements; and buy-in and participation from state and other relevant governing bodies for effective policy implementation. Mandatory compliance monitoring of mitigation measures could also ensure that risk mitigation is achieved for maximum benefit. Additionally, policies and institutions that promote long-term loans matching the life span of hydropower plants could reduce the unit cost of production.

What next?

As the demand for electricity in South Asia increases, the challenge will be to fulfil demand without compromising future needs. While hydropower is a promising alternative energy source, its success depends on how well the associated risks and concerns – social, economic, environmental, and technical – are addressed.

Sustainable hydropower is the only acceptable way for the region to meet its future energy needs Improved coordination and collaboration among stakeholders will be a prerequisite for this. There is a need for greater cross-border electricity trade, which promotes system efficiency and flexibility, and takes advantage of geographical, seasonal, and daily complementarities in demand and supply. The BBIN (Bangladesh, Bhutan, India, and Nepal) subregion is a good example where further grid-based development would enable Bhutan and Nepal to sell the electricity produced by their fast-flowing rivers to India and Bangladesh respectively.

There is also scope to customise international sustainability protocols covering social, environmental, and economic practices with proven records to suit South Asia’s needs.

Nisha Wagle and Chimi Seldon are associated with the International Centre for Integrated Mountain Development’s (ICIMOD) Water and Air theme and Knowledge Management and Communication unit respectively.

Image: Marsyangdi Hydropower Station in Nepal by Jitendra Bajracharya / ICMOD.