Economic Development and Environment in Africa: The Inga Hydroelectric Project

Charles HernickPresentation to GE519: Energy, Society, and the Environment -Boston University5 February 2015

About Cadmus

• Employee-owned company

• Staff have worked in over 100 countries including conflict, post-conflict, and transitional economies

• Employs over 400 full-time professional staff members

• Leading provider of environmental compliance services to United States Agency for International Development (USAID)

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USAID’s Mission

“We partner to end extreme poverty and to promote resilient, democratic societies while advancing our security and prosperity”

WORLD BANK GOALS

By 2030:

• End extreme poverty by decreasing the percentage of people living on less than $1.25 a day to no more than 3%

• Promote shared prosperity by fostering the income growth of the bottom 40% for every country

Need for electricity in DRC• Generally, there is a positive link between

infrastructure and economic growth

• Unreliable power has significant opportunity costs– Power outages:

• 12.3 power outages a month vs. 5.6 for all other countries (averaged)

• 4.9 hrs. per month of outages vs. 2.7 hrs. for other countries (averaged)

• Mining companies in DRC estimate constant energy could increase output by 40%

• Estimated annual loss in sales of 6%, and an estimated 6.2% decrease in GDP

• Significant direct costs for backup generators and fuel

Generation Options

• The “full cost” of each energy source varies

Electricity Distribution

• Micro-grids

– Self-contained

– Independent power producers

• Regional Grids

– Interconnected

– Redundant sources

Why Hydropower?

Advantages

• Renewable

– No natural resources consumed

• Decreased air emissions

• Reliable (water flow)

• Flexible

– Can alter energy output based on need

Disadvantages

• Expensive to build

• Environmental impacts

– Ecology

– Agriculture

– Water

Environmental and Social Impact Assessment: Putting Together Parts of the Puzzle

• Inform Design

– Current state

– Evaluate impacts

– Avoid significant impacts

• Better decisions

• Better projects

Environmental Impacts

• Resources

– Soil/Geology

– Flora

– Fauna

– Air

– Water

– Climate Change

• Long and Short Term

Social Impacts

• Affected people– Lost income– Resettlement

• At risk populations– Women– Indigenous People– Disabled– Young and old

• Cultural Heritage and Resources– Structures/archeology– Cultures– Traditions– Intellectual Property

Ecosystem Services

Provisioning Regulating Cultural

Food Air Quality Regulation Spiritual and Religious Values

Crops Climate Regulation Aesthetic Values

Livestock Global Recreation and Ecotourism

Capture Fisheries Regional and Local

AquacultureWater Regulation (hydro power focuses here)

Wild Foods Erosion Regulation

FiberWater Purification and Waste Treatment

Timber Disease Regulation

Cotton, Hemp, Silk Pest Regulation

Wood Fuel Pollination

Genetic Resources Natural Hazard Regulation

Biochemicals, Natural Medicines, Pharmaceuticals

Freshwater

Source: MEA 2005

Democratic Republic of Congo

DRC Development Context• Conflict and political strife

since the 1960s– ≈ 5.4 M died in the 1990s

from conflict

• GDP: US$28 billion– Agriculture (44 %)– Industry (23 %)– Services (33%)

• As of 2010, average per capita GDP was US $300– 75 percent on less than $1

per day

• Human Development Index: 186/187

• Life expectancy: 56.5 yrs(2014)

• 400,000 women are subject to sexual violence every year

DRC Development Context

• DRC has vast natural resources including untapped deposits of raw minerals– May be worth over US$ 24 trillion (Paul Trustfall)

• Congo rainforest: 2nd largest in the world

• Congo River Basin– 2nd largest flow and the 2nd largest watershed in the world– One of the most biodiverse

• Over 60 species are threatened, vulnerable, or near extinct

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How should DRC use its resources to develop?

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Harnessing the Congo River

http://www.redbull.com/cs/Satellite/en_INT/Video/Congo-The-Grand-Inga-Project-Exclusive-Extended-Trailer-021243249885655

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Inga 1, 2, 3 … Grand Inga

Dam Status Power Potential

Location

Inga 1 Completed 1972

351 MW (at 60% capacity in 2013)

Diversion canal downstream of Grand Inga diversion

Inga 2 Completed 1982

1,424 MW(at 60% capacity in 2013)

Inga 3-BC Proposed 4,800 MW Bundi Valley with diversion upstream of Inga 1 and 2 diversion

Grand Inga Long-term potential

40,000 MW

What will the impacts of Inga 3 be?

• What can we learn from the Three Gorges dam?

– Total installed capacity 22,500 MW

Three Gorges Dam (China): largest in the world

Economics• Inga 3-BC estimated cost is U.S. $9.8 Billion

(2013 World Bank/IDA estimate)– Common infrastructure

– Power station

– Line to mining zones in DRC

– Line to South Africa

• Estimate is preliminary: proposed World Bank projects will result in comprehensive project scoping

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Economics• For Inga 3, a positive rate of return is contingent on:

– Cost of project• Political instability• Construction contingencies

– Revenue• Negotiated $ per kWh rates• Collections

– Operational costs• Technical, managerial, and financial capacity is needed to keep costs

reasonable

• Regional benefits could be significant– $1.1 billion saved per year in reduced energy costs for countries

in the region– Possible 3 percent increase in DRC GDP from net exports from

Grand Inga

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People

Public Health and Resettlement of Project-Affected Peoples

• Estimated 12,000 plus people will need to resettle for Grand Inga

• Public health assessments need to be conducted to ensure that diet and quality of life is improved

• Negative economic and social impacts of the project need to be mitigated

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Environment – Endangered Species

• Four IUCN Red Listed mammal species have been identified in the zone of influence including downstream– Chimpanzee (endangered), hippopotamus (vulnerable), Bay

duiker (least concern); and sitatunga (least concern), manatee (vulnerable)

• Lower Congo Rapids ecoregion has exceptional species richness– High endemism in fisheries (34 of 129 species are endemic,

26%) – Current ecosystem structure (river flows) driving fish speciation

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Mountain Gorilla and Bonobo Chimpanzee

Forest Elephant

Environment – Maintain Environmental Flows

• Naturally variable flows are essential for biodiversity and ecosystem services– Maintaining a minimum low flow is insufficient– Need to integrate seasonal variations – Consequences include:

• Loss of river and coastal fisheries• Accelerated erosion• Sedimentation and productivity in Congo plume in Gulf of

Guinea• Impact carbon sequestration from mangroves, river plume

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Long Term Impacts

• Changes to Water/Land Surface Area are Anticipated– Grand Inga will raise the river level by 40m (~12 stories)– Impact water levels 115 miles upstream

• Trans-boundary issues• Require resettlement

• Change in downstream flow from Grand Inga will affect flooding, habitat such as the mangroves, flora and fauna in aquatic and terrestrial environs, the ocean plume, and carbon sequestration

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Should DRC

develop Inga 3?

Should DRC develop Inga 3?

• Consider

– Energy source options

– Sustainable development• Economy

• Society

• Environment

• Points of View

– President of DRC

– Minister of Environment

– Local peoples

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Charles HernickSenior Associate, International Group

+1 703 247 6193

Charles.Hernick@CadmusGroup.com

@CharlesHernick