Lies and dam facts
Common sense and dealing with the right people would help unblock badly needed investment in water in developing countries. Mr Briscoe explains.
If America’s great civil works such as the Hoover Dam, the Grand Coulee Dam or the Tennessee Valley Authority were proposed today, they would most likely remain ink on paper.
John Briscoe, a former senior advisor on water at the World Bank and now professor at Harvard, does not mince his words. The fault lies with economists, he says, who for 40 years have argued that the regional and other indirect impacts, which motivated such projects in the first place, should not be counted, and also with environmentalists, who oppose all such projects because of concerns about ecological damage.
Yet these works defined post-Depression America. They were the testaments of a visionary, resourceful nation. They were seen as astonishing feats of engineering and imagination. Developing countries admire and want to emulate them. The question is: should they and can they?
Mr Briscoe describes current planning in rich countries as “planning by constraints”, an expression he borrows from the US Army Corps of Engineers. The imposition of this “post-wealth” approach on developing countries means that the only known road to prosperity is closed to many poor countries. With its army of academics, technocrats, NGOs and single-issue advocates, the developed world promises to help poorer countries, but only if they avoid the messiness of steel, concrete and any perceived ecological damage. Infrastructure, which once accounted for most World Bank investments, has fallen out of favour in recent decades. “In the last 15 years,” says Mr Briscoe, “the World Bank has financed only two major dam projects.” One of them was Bujagali in Uganda, which took over a decade to win approval. The other was the Nam Theun 2 plant in Laos, which underwent 14 reviews by independent panels before finally being approved.
When it comes to water, rich and poor countries face different problems. Rich countries, says Mr Briscoe, have more water infrastructure than poor countries and have acquired a high degree of water security as a result. For example, the dams on the Colorado River can store up to 1,000 days worth of water compared to just 30 for the Indus. The word “infrastructure” need not evoke degraded habitats, displaced communities and rapacious multinationals. However, Mr Briscoe says that governments and aid agencies, driven by advocacy groups, have switched their focus from infrastructure to social ends. Those ends have been enshrined in the Millennium Development Goals.
Mr Briscoe calls the MDGs “the greatest setback for development in recent decades.” The problem is not the goals themselves, he says, but that they put the “social cart” before the “horse of economic growth”. The architects of the MDGs drew up a list of social goods: education, gender equality, reduction of child mortality, access to water and sanitation, etc., but nothing on transportation, energy and agriculture, the historic platforms for poverty-reducing growth. Nor do the MDGs even acknowledge the foundations on which every presently rich country built its economy. He cites hydropower as an example. Seventy percent of hydropower capacity has been exploited in OECD countries, compared to 3% in Africa. At no time in history, he says, has a nation lifted itself out of poverty without improving its productivity and infrastructure. Yet this is what poor nations are being told to do.
The MDGs were formulated by people Mr Briscoe calls the “anointed”. They include academics, NGOs, single-issue advocates and those who bandy about the term “new paradigm” (meaning “never tested”). Yet it is striking, he says, that while none of the emerging middle-income countries have followed an MDG-type path, aid-dependent poor countries are obliged to comply.
While at the World Bank, Mr Briscoe advocated what he calls “principled pragmatism”. This meant that he tended to heed the advice of practitioners over academics, take the concerns of politicians seriously, pursue projects where the chances of implementation were highest, and avoid making “the best the enemy of the good”. He agrees that developing countries need both infrastructure and institutions, but dismisses the notion that major projects in infrastructure should only be undertaken after the adoption of reforms. “It has never been done that way,” he says. “It has never been reform now, invest later.”
For successful examples, Mr Briscoe points to emerging markets. “Middle-income countries, such as Brazil or China do not submit themselves to the strictures of aid agencies when it comes to large water projects.” The wealth of these countries permits them to slip the bonds of “planning by constraints” imposed by aid agencies in return for funding. Poor countries are not so lucky.
Mr Briscoe’s experience as World Bank country director in Brazil between 2005 and 2008 also taught him how international organisations such as the Bank and the OECD can best help these countries.
President Lula, he says, gave high priority to building two low environmental impact “run-of-the-river” hydropower projects in the Amazon, which would generate some 8,000 megawatts, closing a gulf between demand and supply. Mr Briscoe says the projects were supported by the governors and people of the region, but opposed by international environmental groups and celebrities. Brazil is lauded for its use of clean energy, largely because 80% of its electricity comes from hydropower. Even so, he says, it has tapped just a third of its hydroelectric potential, and most of this potential is in the Amazon.
The World Bank did not invest directly in the projects. In fact, Brazil did not need money. What the country did understand, according to Mr Briscoe, was that investment by the Bank would have meant jumping through endless hoops, and years of delays. On the other hand, Brazil made use of the Bank’s expertise and reputation in dealing with complex sustainability issues and developing an open, competitive bidding process (transparent bidding cut costs by some 30%).
It was in Brazil that Mr Briscoe also learned how important it was to listen to politicians, and to allow them rather than the Bank’s technocrats to set the priorities in programmes financed by the Bank. Most regional governors, he found, hoped to realise two or three important projects during their terms. “They had run for office and had a good sense of what was important for their people, and they would spend most of their political capital on these priorities”. He asked them to state their priorities and worked from there. The result was that the interval between approving and breaking ground on a new project fell from 36 to 10 months. At the Bank however, “it was the cause of a house revolt among the technocrats, who liked to be on top, not on tap.”
Another issue is “water as a human right”, much discussed in the international arena, but virtually never, he says, where people are actually solving practical problems. Declaring water to be a human right may make one feel good but it does little to improve the lives of the poor. The greatest injustice, he argues, is not that the poor should pay a reasonable price for basic services, but that they are denied those services altogether.
All effective public and private mechanisms treat the poor as customers who pay for their services. Getting those services to the poor is the goal. Money is needed, but investors are wary. In the developed world, utilities are classic low-risk investments. This is not the case in the developing world. For the water business the period of return is long, the ratio of capital to revenues is high, and therefore cash flow for an investor will be negative for the first ten years, leaving investors vulnerable. The numbers are not encouraging: of private sector infrastructure contracts in emerging markets, 3% of contracts are cancelled in the telecoms industry, 8% in electricity. In the water sector, cancellations average 33%. Few investors can stomach such risk; and without such investments the poor remain at the end of the line, unserved.
Political stability and transparency will encourage investors, but helping countries to achieve prosperity and stability will not work if the “planning by constraints” model of rich countries is insisted upon. This is not to say that environmental concerns should be ignored. But what Mr Briscoe decries is the lack of historical perspective in developed countries, and “telling others to do what you never did and don’t do”. He is sceptical of technocrats whose “evidence-based” analyses often put their own priorities ahead of those of the national political and policy leaders who have a broader and more complex understanding of the needs of their own countries. “The OECD should engage more with thinking practitioners and effective politicians from both rich and poor countries,” he says. “They are the ones who get things done and enable people to live better lives.”
“Making Reform Happen in Water Policy: Reflections from a Practitioner”, presentation by John Briscoe at the Global Forum on Environment: Making Water Reform Happen, Paris, 25-26 October 2011.
Delli Priscolli, Jerome (2011) “Interview with John Briscoe: Two decades at the center of world water policy”, Water Policy no. 13, IWA Publishing.
©OECD Observer No 286 Q3 2011
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