🌱 Why the World Bank Is Betting Big on Mega Dams Again 🌍💰

After a decade of reluctance, the World Bank has made a dramatic shift by once again financing mega dams. Once a major supporter of large hydroelectric projects, the bank had pulled back due to concerns over environmental destruction, social displacement, and long construction timelines. However, in a surprising reversal, it recently approved funding for the Rogun Dam in Tajikistan and is negotiating support for the massive Grand Inga project in the Democratic Republic of Congo (DRC)—potentially the world’s largest hydropower scheme.

So, why is the World Bank doubling down on mega dams? Is this a necessary move for clean energy, or a costly mistake? Let’s dive into the factors driving this shift.

Table of Contents

• The World Bank’s Shifting Hydropower Policy

  • From Dominance to Decline

  • The “High Risk, High Reward” Approach

• Why the World Bank Is Reinvesting in Mega Dams

  • 1. The Global Push for Clean Energy

  • 2. Geopolitical Influence and Economic Strategy

  • 3. Financial and Political Motivations

• The Risks and Controversies

  • 1. Environmental and Social Costs

  • 2. Economic Risks and Long Timelines

  • 3. Vulnerability to Climate Change

• Are Mega Dams Still the Future of Energy?

• Conclusion

• FAQs

The World Bank’s Shifting Hydropower Policy

From Dominance to Decline

Throughout the mid-to-late 20th century, the World Bank was the leading financier of large dams worldwide. However, growing opposition over their environmental and social consequences led to a decline in funding. In 2000, the World Commission on Dams released a report highlighting the negative impacts of mega dams, which pushed the bank to reduce its support.

From 2014 to 2024, the World Bank backed only one major hydropower project. Instead, it focused on smaller-scale renewable energy and transmission infrastructure. But in 2025, the institution signaled a major shift, approving multiple large dam projects and reviving discussions around others that had been shelved for years.

The “High Risk, High Reward” Approach

Rather than shying away from controversial projects, the World Bank appears to be embracing high-risk, high-reward investments—particularly those that promise large-scale energy production and economic transformation.

The Rogun Dam, for instance, is expected to be the world’s tallest dam at 1,100 feet and cost $11 billion to complete. Similarly, Grand Inga in the DRC is a $100-billion project that, if completed, would nearly double the power output of China’s Three Gorges Dam—the current largest hydropower facility in the world.

Why the World Bank Is Reinvesting in Mega Dams

1. The Global Push for Clean Energy

One of the World Bank’s main justifications is that hydropower is a key part of the clean energy transition. Unlike fossil fuels, hydropower produces zero direct emissions and can provide baseload electricity, complementing intermittent sources like wind and solar.

In a statement, the bank said, “It has become increasingly clear that hydropower is an important component of promoting clean energy investments.” This argument suggests that dams are necessary to stabilize grids as nations move away from coal and gas.

2. Geopolitical Influence and Economic Strategy

Beyond energy, these projects are also about global influence and economic power. In regions like Central Asia and Africa, hydropower projects serve as strategic investments that allow major global players—China, Russia, and Western countries—to gain leverage over local economies.

For example, the Rogun Dam strengthens Tajikistan’s geopolitical position by making it an energy exporter. Similarly, Grand Inga could reshape Africa’s electricity supply, affecting countries from South Africa to Nigeria.

3. Financial and Political Motivations

The decision to fund large dams may also be influenced by internal World Bank politics and leadership priorities. Some analysts suggest that World Bank President Ajay Banga, who took office in 2023, wants to make a bold statement early in his tenure.

Additionally, with U.S. support for the World Bank under threat—especially if former President Donald Trump wins another term—the institution may be pushing forward large projects before political changes disrupt its funding.

The Risks and Controversies

While the World Bank argues that mega dams are necessary, critics strongly disagree. Here are the key risks:

1. Environmental and Social Costs

• Mega dams flood vast areas, displacing local communities—often Indigenous groups. The Rogun Dam alone will displace up to 60,000 people.

• They disrupt ecosystems, affecting fish populations and biodiversity.

• Some reservoirs produce significant methane emissions, reducing their climate benefits.

2. Economic Risks and Long Timelines

• Mega dams require billions of dollars upfront and take years—if not decades—to complete. By the time they are operational, other energy sources like solar and wind may be far cheaper and more efficient.

• The Grand Inga project, for example, has been delayed for decades due to financial, political, and logistical challenges.

3. Vulnerability to Climate Change

• Droughts are becoming more frequent due to climate change, reducing river flow and limiting hydropower generation. Southern Africa, for example, has seen severe power shortages due to drought-affected dams.

• Many proposed projects, including Upper Arun in Nepal, are being built in seismically active zones, increasing risks of earthquakes and dam failures.

Are Mega Dams Still the Future of Energy?

The World Bank’s renewed focus on large dams is a high-stakes gamble. While hydropower remains an essential part of the energy mix, critics argue that the era of mega dams is fading due to their high costs, long construction timelines, and environmental risks.

Alternatives like wind, solar, and battery storage are becoming cheaper and faster to deploy. A 2018 study found that, in most scenarios, a mix of solar and wind is more cost-effective than the Grand Inga project.

The key question is: Will the World Bank’s mega dams deliver on their promises, or will they become costly, outdated relics of the past?

Conclusion

The World Bank’s renewed push for mega dams reflects a complex mix of energy policy, economics, and geopolitics. While hydropower can provide clean energy and economic growth, the risks—environmental damage, high costs, and vulnerability to climate change—make these projects highly controversial.

With solar and wind power becoming more affordable and accessible, the World Bank’s bet on mega dams may prove to be an expensive miscalculation. The coming years will reveal whether these projects can truly deliver on their promises—or if they will serve as warnings of why the world moved on from big dams in the first place.

FAQs

Why has the World Bank resumed funding mega dams?

The World Bank sees hydropower as a key part of the clean energy transition. It argues that large dams can provide stable electricity to complement intermittent renewables like wind and solar. Additionally, these projects are tied to geopolitical influence and economic strategy, particularly in regions like Africa and Central Asia.

What major dam projects is the World Bank currently supporting?

Some of the key projects include:

• Rogun Dam (Tajikistan): Set to be the world’s tallest dam, costing $11 billion.

• Grand Inga (Democratic Republic of Congo): A $100-billion project that could become the world's largest hydroelectric facility.

• Upper Arun (Nepal): A $1.1 billion project despite Nepal already having excess hydroelectricity.

What are the main concerns about mega dams?

Critics argue that mega dams:

• Disrupt ecosystems and displace local communities (Rogun will displace up to 60,000 people).

• Take decades to complete and are extremely expensive compared to wind and solar energy.

• Are vulnerable to climate change, as increasing droughts reduce river flows and limit power generation.

Are mega dams better than wind and solar power?

While dams provide consistent energy (unlike wind and solar, which depend on weather conditions), they are also far more expensive and slower to build. Studies suggest that in many cases, a mix of solar, wind, and battery storage is cheaper and more sustainable than large hydro projects.

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