Pakistan Problem: A Big Dam in Times of Small Development

At a recent CGD roundtable, water expert John Briscoe gave a whistle-stop tour of Pakistan’s water economy.  In a conversation framed by comments about Pakistan’s history of resilience and ingenuity, he laid out the compelling facts about Pakistan’s dire situation: 

• Already one of the most water-stressed countries in the world, Pakistan is dependent on a single river system originating outside its borders and fed by Himalayan snow-melt, highly vulnerable to climate change.
• Despite a history of robust water treaty agreements with neighboring India, the results of recent arbitration proceedings may have disrupted the countries’ tenuous balance, jeopardizing Pakistan’s level of protection “against unintentional or intentional harm from Indian manipulation.”
• Pakistan has extremely limited water storage capacity due to a deficit in major infrastructure: the Indus Basin can barely store 30 days of water, compared to India’s major rivers which store between 120-220 days’ supply and dams in Australia and the US with 900 days’ storage capacity.

These issues, discussed extensively in a recent report by the Friends of Democratic Pakistan (FODP), are also starting to get wider attention: the National Intelligence Council’s Global Trends 2030 report identified the food/water/security nexus as one of four megatrends; a recent USIP analysis identified Pakistan’s water security in a series about the “sleeper risks” for 2013; and a senior government official at an off-the-record event last December spoke about water security as “one of the biggest issues in Pakistan that nobody is talking about.”So what should be done about it?One of the FODP report’s leading recommendations is to resume efforts (after a 40-year hiatus) to build a platform of major infrastructure.  This translates into building dams, and first on the list is the contentious Diamer Basha dam in the disputed territory of Gilgit Baltistan.A multipurpose dam would deliver many benefits: increased storage capacity to ensure water from the Indus River is more reliably available throughout the year, flood control to help prevent the devastation resulting from events like the 2010 floods, and generation of low-cost hydropower to help address the country’s power problem.  Critically the project has political support from the key stakeholders in the government of Pakistan. The US State Department has voiced support for the project.  CGD itself has repeatedly urged US support of the dam, even while acknowledging the weakness of Pakistan’s current government, the very real need for institutional and pricing reforms in the sector, and the constraints domestic politics impose on the ability to institute these reforms.  We wrote in our 2011 report Beyond Bullets and Bombs: Fixing the US Approach to Development in Pakistan:

“Support one or two major, long-term infrastructure projects…a major investment in a large hydropower project, such as the one planned at Diamer-Basha…has features which are valuable in their own right: it would involve a healthy degree of collaboration with private-sector partners and would take advantage of American expertise in engineering and finance. Moreover, it would be a highly visible symbol of the United States’ long-term commitment to Pakistan— something many policymakers in the U.S. and Pakistan have been eager to see.”

And also in an open letter from CGD president Nancy Birdsall to State Department deputy secretary Tom Nides, as well as our more recent report More Money, More Problems: A 2012 Assessment of the US Approach to Development in Pakistan:

“Everyone interviewed pointed to the need for Pakistan to invest heavily in more hydroelectric generation…in addition, large dam projects like Diamer-Basha have the added benefit of providing a water reservoir and a degree of protection against floods, both of which Pakistan desperately needs.”

Despite this support, with an estimated price tag of at least $12 billion the project requires a financial commitment that exceeds Pakistan’s means.  This renders support from external partners – particularly international financial institutions such as the World Bank and the Asian Development Bank – a necessity.This, apparently, is where things break down.  While it hasn’t been explicitly stated by the IFIs, it appears that multilateral financing for large dams has dried up (excuse the pun) because of the controversial nature of this kind of infrastructure.  This hasn’t affected rapidly growing countries like Brazil and China, who have – and spend – the  domestic resources required to build large dams (in the last months alone, the Chinese government has unveiled plans to build large dams on rivers that flow into other countries).  But as the FODP report states, in countries like Pakistan the “withdrawal of development assistance for building dams has been devastating for both water productivity and security.”While the World Bank website lists plans to support smaller projects, like the extension of a hydropower project at the Tarbela Dam and agriculture productivity improvement projects, the high cost and complexity of Diamer Basha appears to be paralyzing.Which begs the question: if the IFIs are no longer willing to support the kind of “big development” embodied by dams and major infrastructure, what options remain for lower middle income countries with such severe constraints to their development?  Do the environmental risks and human impacts of dam/reservoir construction outweigh the dramatic benefits a project like this would provide?  And, if so, can the sum of benefits of small development projects exceed the benefits afforded by a single big one?While the answers to these questions are not clear, one thing is: the conversation about Diamer Basha has been stalled, with little progress toward resolution. I can only hope that in the context of somewhat calmed relations between the U.S. and Pakistan, the key actors – particularly the IFIs – will take the opportunity to reengage in a conversation that attempts provide some of these answers.