What value does Diamer Bhasha Dam provide to Pakistan?

'Infrastructures exist to serve a purpose. By themselves they do not create value... (they) are only worth the value they can distribute to citizens' - The Prosperity Paradox.

With the Pakistan prime minister kicking off construction for Diamer-Bhasha Dam in July, questions arise of the positive contribution this $12.6 billion mega-dam project will have to the Pakistani people. PM Imran Khan has stated that this project will contribute to solving the country’s water crisis and provide cheap electricity. However, to understand the true impact the dam will have on these issues and how efficiently it will be able to provide benefits, one will need to understand the threats Pakistanis are facing in both sectors.

Concerning water security, Pakistan ranks third in the world among countries facing acute water shortage. It is an impending crisis with the Pakistan Council of Research in Water Resources (PCRWR) predicting that the country will soon be facing a drought-like situation. A primary reason is due to its water-intensive economy, with it having the world's fourth-highest rate of water use. This is along with the fact that the country’s two major water reservoirs, the Tarbela and Mangala dams, have reached their "dead" levels. Pakistan receives 145 million acres feet of water, yet can only save 9% of it currently.

The Diamer Bhasha Dam should be able to address this issue at least at one front, providing an additional gross storage space of 8.10 million acre-feet (MAF) and thus increasing storage capacity from 30 to 48 days. Agreeing with this analysis is a World Bank report: ‘Pakistan: Getting More from Water (2019)’, which advises the government to 'secure finances for construction of Diamer Bhasha Dam’.

Nevertheless, the report also states that this advice is only valid 'if HEP justifies the expense', hinting at the authors' concern of the large expenses of building a mega-dam like it. The report also points out that 'Pakistan does not make the best use of its water endowment' and that the main factor of Pakistan's water security issue is its 'resource management and poor water service delivery’. This insight from the World Bank alludes to the notion that this dam might not be addressing the most significant obstacles to a water-secure Pakistan. In fact, William Young (an author of the report) came out and blatantly detailed that "new dams can help improve water security but will not address the most pressing water problems that Pakistan faces."

On the other hand, the only thing consistent about Pakistan's electricity sector is its inconsistency. Especially during monsoon seasons, many Pakistanis lose access to electricity in power outages and load shedding. This, along with the fact that nearly 50 million Pakistanis lack access to grid electricity, causes the country to rank 115th out of 137 for reliable power.

What lies behind this disheartening sector is, according to the World Bank Report: In the Dark, are the vast inefficiencies in its supply chains, which requires smart investment in all components of the chain, from fuel supply, electricity generation, transmission and distribution and down to consumers.

Thus, while the dam will be able to generate 4,500-MW of affordable energy, this is only one section of the complex electricity supply chain. Despite this, people still extend an argument that a mega-dam, like the Diamer Bhasha dam, won't be the most efficient method of electricity generation. The World Commission on Dams found that best-case scenario, large dams are only marginally economically viable with them having an average cost overrun of 56%.

Alternatively, some argue that hydro-electric power is not the best source of energy, with wind and solar claimed to be out-competing hydropower generated from mega-dams. Nonetheless, the same amount of sources could be found contrasting this, stating that modern hydro turbines can convert up to 90% of energy into electricity, making hydropower the most efficient electricity generation method. Additionally, an International Renewable Energy Agency report notes that hydropower can be low-cost, thus efficient, depending on the chosen site of the plant. Furthermore, as one of its key findings, it declares that hydropower plants with reservoirs (which is a category that the Dimer Bhasha Dam will fit) contribute to grid stability throughout the year.

But what about the 50+ million Pakistanis, who don't have access to grid electricity? Can this dam bring them closer to being able to: drink clean running water; preserve food in a fridge; access the internet and other everyday essentials that require grid access?

The answer is no.

The primary reason dams like it won't be able to provide cheap electricity to all Pakistanis, is because it ignores the 35% of Pakistani households that aren't connected to the national grid, the non-consumers. These are the families that are excluded from electricity distribution, resulting in them being the most vulnerable segment of our rural population, and dams, in general, don't look to remove the obstacles that exclude them. These obstacles can only be removed by what the authors of the book ‘The Prosperity Paradox’ call market-creating innovation; this is an innovation that would serve people for whom no products could be accessed, i.e. the households not connected to the grid. These types of solutions have the biggest impact on jobs, wealth and wellbeing (by solving significant problems). This vast upside of having universal access to electricity has caused the World Bank to argue that it would add $5.7b a year to the Pakistan economy.

But let us not forget that this dam is expected to produce clean and cheaper electricity for those who are connected to the grid, which is still the majority of the country and should decrease their discretionary incomes.

Before coming to a cemented analysis of the impacts this dam will have, we must listen to all stakeholders; including groups that have come out calling for the projects cancellation. Most prominently against this project is the World Sindhi Congress (WSC), which believes that this project will further exacerbate the perils of the indigenous people, who are already suffering from a shortage of agriculture water. They argue that mega-dams destroy the existing ecosystem balance, caused by the environmental damage dams create. Among these perils include the forecast that the dam's construction will displace 30,350 people from 32 villages.

To compensate, the government plans to pay back the value lost to the families affected; however, there have been blockades in the negotiations with the current offer by the Water and Power Development Authority (WAPDA) supposedly being the 'best rate' they could offer to the affectees. Nevertheless with the offer proposed, hotel owners in the region stand to lose millions of rupees as their commercial land was evaluated as agricultural or barren, despite the fact that it was used purely for commercial use.

In addition, the dam is being built on a seismic zone as well as it being situated within the 40km radius of signs of volcanic activity. Due to this danger, there is a risk of the dam bursting, which would be catastrophic to the barrages and other dams on the Indus. This of course does not mean that a safe dam in this region is not possible. Rather it implicates that the government team must do a thorough analysis of the area and ensure that the engineers, the seismic experts and the government ensure that the design of the dam prevents possible calamities from occurring.

Furthermore, due to the nature of the Indus River, India fears that this dam would result in water shortages. Another reason India has objected to this dam is that it passes through Azad Kashmir. However, the Pakistani government would argue that another reason they built this dam was in response to the Indian PM Modi continuing to build dams on the Indus despite the Indus Water Treaty of 1960. This, along with the fact that Modi had threatened to stop water from flowing into Pakistan plains, the decision to go through with a dam as a necessity for the national security of Pakistan.

The Diamer Bhasha Dam is a project that has the potential to distribute significant value to Pakistani people. Its construction should immediately create jobs and help with PM Khan's focus on the construction sector to help bolster the recovery of the economy as we continue to live in the novel coronavirus world. Once fully functional, it should be able to: produce clean energy; store water and help with flood mitigation. Provided that the team responsible for design and construction are able to ensure that the dam is earthquake proof and that the households affected are not significantly disadvantaged due to their displacement.

The government needs to ensure that what happens to these displaced families are nothing like what happened to those displaced by the Tarbela and Mangala, where 24 and 41, respectively, years after construction finished, displaced people weren't able to permanently resettle and actually got poorer.

Additionally, before looking to build more mega-dams, the government must first identify if mega-dams are still the most efficient and risk-free method of achieving the same goals. But most importantly, like all projects and policies, the Diamer Bhasha Dam will not solve the problems of Pakistan's water and electricity sector. Both sectors require smart investments that stimulate market-creating innovation. Whether in the private or the public sector, Pakistan needs to find ways to remove the obstacles that thwart the current non-consumers of grid electricity and clean water from utilising these essentials. The jury is still out about whether the predicted positive impacts of the Diamer Bhasha Dam will come into fruition; nevertheless, more still needs to be done.

The writer may be reached at: ibrahim.usmani03@outlook.com