Global Context

The Nature Conservancy, along with our partners, has developed a framework of best practices for energy and water resources planning and management that we call Hydropower by Design. The approach is intended to complement and enhance existing planning mechanisms and decision-making processes, and provide solutions that balance the dual needs for healthy, productive rivers and low-carbon energy.

For many countries, hydropower provides a strategic resource that can increase energy supply at low costs and make important contributions to water resources management and development objectives. As the world turns to low-carbon sources of energy, hydropower will contribute to this growth - representing nearly US$2 trillion of investment between now and 2040. Most of this new development will occur in Latin America, Asia and Africa. Most of this new development will occur in Latin America, Asia and Africa.

While hydropower will play a key role in the transition to a decarbonized energy system, dams can cause significant negative social and environmental impacts. And, although hydropower investments can contribute to broader economic development goals, projects planned in isolation often fail to achieve that potential. These missed opportunities and environmental and social impacts contribute to conflict and uncertainty, which increase risk for investors and developers, reduce political support for hydropower and constrain investments and operations.

The world urgently needs solutions that lower these risks and produce broader benefits. Infrastructure decisions and policies made today will shape countries' economies and strongly influence whether the world succeeds in maintaining a stable climate. The world's rivers and the diverse values they provide to people and nature depend on sustainable solutions for energy and infrastructure.

Hydropower by Design, as presented in this Guide, offers governments, financial institutions, developers, NGOs and communities an opportunity to influence and make informed decisions about hydropower development that will deliver the broadest range of benefits over the long run.

What Is It?

We recognize that rigorous design guides hydropower development at multiple levels and has notably improved the sustainability of individual dams. However, a number of major impacts from hydropower cannot be mitigated effectively at the scale of a single dam. Further, project-level sustainability cannot address the complex issues posed by multiple hydropower developments across a river basin or region. We propose principles that integrate best practices at both the project and system scales to promote sustainability and deliver broader development benefits.

Hydropower by Design interweaves methods that are integrated, quantitative, multi-criteria and multi-project to achieve hydropower planning and management that promotes sustainability and optimizes benefits for people.

• Integrated because it considers all relevant criteria simultaneously, rather than sequentially. In contrast, most assessments, whether at the project level (EIA) or above the project level (cumulative and strategic environmental assessments), consider environmental and social aspects after technical and financial studies have been completed.
• Quantitative rather than qualitative, to increase the rigor of the analysis and the confidence in comparing multiple options.
• Multi-criteria because of the multi-faceted positive and negative impacts of hydropower.
• Multi-project (or system scale) because cumulative and synergistic costs and benefits of multiple projects are difficult to predict from a sequence of project-based assessments. A hydropower investment program that offers the broadest range of benefits can generally only be identified at a system scale, rather than project-by-project.

Hydropower by Design can also be viewed as a synthesis of a range of existing best practices across several dimensions, including: planning, environmental and social review, licensing, mitigation, and project design and operation. There are elements of this framework that can be adopted by the private sector (e.g., hydropower developers), financial institutions that fund hydropower and government agencies - including those that plan energy development, those that review and license infrastructure projects and/or manage environmental and social resources.

Generally, the principles of Hydropower by Design can be integrated or coupled with existing policies, regulations and other mechanisms. These include risk screening, corporate safeguards, environmental review processes - including Environmental and Social Impact Assessments, Strategic Environmental Assessment and Cumulative Impact Assessment - and policies for planning, licensing and mitigation. In other words, a specific entity, such as a government agency, does not necessarily have to adopt a new program called “Hydropower by Design” but, rather, can compare their existing policies and practices to the principles of HbD and strive to integrate those principles into existing mechanisms.

Because HbD is intended to meet a range of stakeholder objectives and inform decisions, the approach we describe in this Guide is as much a social process as it is technical. It is not an instruction book that can be followed step-by-step. It must be tailored to the social, environmental and policy context in which it is applied. The Guide is organized around best practices for implementing the process, which are distilled (for ease of understanding) into five separate, but interrelated, components common to all HbD initiatives, which include:

• Embed within planning and decision-making processes
• Engage stakeholders and understand interests and objectives
• Translate stakeholder interests and objectives into metrics
• Assess development options and illustrate tradeoff results
• Transfer results to stakeholders to better inform decision

What Does It Offer?

Energy development and generation will always have negative impacts. Tradeoffs are unavoidable. However, in our recently-released report, The Power of Rivers: A Business Case, we show that many impacts can be avoided or reduced and that tradeoffs can be eased.

These benefits emerge by shifting the scale of the solution: decisions about how and where to build, or how to operate, can be moved away from the scale of individual projects and toward the scale of systems.

Recommendations for system-scale approaches are not new and risk being perceived as complicated or burdensome, slowing the pace of investment in places with urgent need for infrastructure. We demonstrate in The Power of Rivers: A Business Case that HbD provides economic benefits to countries, is financially viable, feasible to implement and protects environmental and social values.

Economic benefits. HbD can be implemented in ways that will often lead to greater performance for water-management services (such as irrigation, flood management and water supply) along with improved performance for a range of environmental and social values. Hydropower that is planned and operated as part of a larger system has the potential to increase the benefits from these services. However, hydropower that is not considered part of a system will tend to miss out on opportunities to benefit from these services and can, at times, even conflict with them.

Financially viable. By capturing value from system optimization and improved risk management, projects developed through an HbD approach can have comparable or superior financial performance.

Feasible to implement. New computational tools allow for relatively rapid comparison of alternatives and screening for options. Integration of different types of modeling tools facilitates analyses that simultaneously address the needs of a range of agencies and stakeholders. And most importantly, Hydropower by Design does not necessarily require new legislation, but its components can be integrated into a range of existing policies and practices, including planning, environmental review, licensing and risk screening.

Protects environmental and social values. In a recent assessment of the hydropower sector, it was stated that: "The significant increase in hydropower capacity over the last 10 years is anticipated in many scenarios to continue in the near term (2020) and medium term (2030), with various environmental and social concerns representing perhaps the largest challenges to continued deployment if not carefully managed," (Kumar et al. 2011).

Rivers and associated ecosystems - including floodplains, estuaries and deltas - are among the most productive and diverse ecosystems on the planet, supporting the greatest value of ecosystem services per unit area (Costanza et al. 1997). River valleys generally support the highest value agricultural land and often support towns and cities. Each year, millions of tons of fish are harvested from rivers and their floodplains, providing the primary source of protein for hundreds of millions and jobs for tens of millions – with women composing more than half of that work force. The dams required to generate hydropower necessarily change rivers and river valleys and thus, in addition to creating development benefits, hydropower can also cause significant social and environmental impacts.

In the 2015 report The Power of Rivers, The Nature Conservancy showed that widespread adoption of Hydropower by Design could allow the world to meet 2040 hydropower generation targets with far lower impacts on rivers, and the communities that rely on them, than would occur through business-as-usual planning and management. Our results suggested that if river basins across the globe were developed using HbD approaches, approximately 100,000 kilometers of rivers would remain free-flowing, and able to continue supporting services they provide to people.

In sum, expanding the scale of decision-making, from the project level to the system-scale, is necessary for achieving more balanced outcomes. The transition of decision making to the scale of the whole system is crucial for supporting solutions that tackle the three intertwined challenges the world is working to solve: maintaining a stable climate, delivering energy to support prosperous societies and protecting healthy ecosystems.