Renewed hydropower investment needs social and environmental safeguards

The 50,000 large dams in the world respond to a range of development and security needs, providing power, water storage and flood protection. Yet balancing their benefits against their social and environmental costs has long been controversial. A resurgence in hydropower investment has seen new actors, notably Chinese and private banks, changing the global landscape for financing dams, leading to fewer measures to protect social and environmental values. New financing tools, such as carbon trading, are also playing their part. As the ‘finance landscape’ for hydropower widens, improved tools to ensure sustainability must become a mainstream approach, especially to encourage Asian finance institutions to participate in mechanisms like the Equator Principles — now the main framework used to assess and manage environment and social risk in dam project finance transactions, outside of multilateral safeguards.