ABSTRACT
This chapter focuses on identifying and discussing a dysfunctional practice widespread among development projects that forcibly displace people, yet one that is rarely recognized and discussed in the economic and sociological literature: the practice of externalizing costs in hydropower projects, primarily onto the people who are displaced and involuntarily resettled, as well as externalizing costs in part onto the population and economy of the county and province in which the project is located. The author analyzes the composition of the externalized resettlement costs of hydropower and water resources projects, particularly those not included in the methodology prevailing in many developing countries (and in some developed countries too) for calculating the costs of population resettlement.
The major impoverishment risks inherent in displacement processes are largely the undesirable by-products and impacts of costs externalization. This fundamental set of risks is identified in the Impoverishment Risks and Reconstruction (IRR) model, and these risks are also widely reported anew in the global literature year after year, yet nonetheless many governments, key public agencies, and private project owners decline to recognize them transparently and do not act to eliminate and prevent their repeated occurrence.
This chapter examines China’s previous guidelines, Preparation Method and Calculation Standard for Design Estimates in Hydropower Project (2002), issued by the Ministry of Water Resources of the People’s Republic of China (PRC), and argues that at least nine kinds of costs related to resettlement were omitted from this standard. The externalization of costs is dysfunctional because it results in inaccurate economic feasibility analysis, and transfers unjust costs onto the displaced people and onto surrounding local municipalities. The author argues that, to avoid impoverishment, externalization must and can be eliminated. This requires replacing the 46current paradigm followed in many developing countries with a more just solution: deliberately designing and investing in resettlement plans that follow the paradigm of “resettlement with development.”
