The Dam Builders

by Cecil Kuhne

The federal government has built, and operates, hundreds of dams across the United States. Entire river systems have been dammed. The Tennessee River has more miles of reservoir shore line than surrounds all five Great Lakes. Of the 2,446 miles of the Missouri River, only 149 miles still flow freely, while the remainder of the river has been tamed by dams. The Colorado River basin has been impounded to such an extent that, with vast portions of its flow diverted, little water reaches its outlet in the Gulf of California. The Columbia has been reduced to a succession of reservoirs, with little or no moving water in between.

Dams are constructed by several Federal agencies. The U.S. Army Corps of Engineers is currently working on over 300 dam projects. In the West, most dam construction is carried out by the Bureau of Reclamation. The Bureau, established at the turn of the century, has had its powers expanded over the years from one of irrigation to the point where it now operates some of the largest dam systems in the country. The Tennessee Valley Authority, a major political force in the Southeast, has built some 50 dams throughout the river's basin.

Federal dam builders often claim that dams are needed for flood control. But this often begs the question: a dam is built so that industry and development can move in, making another dam necessary to protect the development encouraged by the first dam, and so forth.

The Cossatot River in western Arkansas is a case in point. The Gilham Dam was justified largely on the basis of the flood damage it would prevent. Yet the 49 square miles of flood plain below the dam had almost nothing to protect: a few barns, a summer shack or two, a handful of gravel roads, and a pasture with several hundred head of cattle. There had never been a recorded flood death on the Cossatot. But the dam prevailed, even though it would have been much cheaper to simply purchase the entire flood plain.

The use of dams for flood control is rarely justifiable from an economic standpoint, since dams are enormously expensive. Under a free market system, such dams would rarely be built because the land to be protected against flooding is usually not worth the cost of the dam. A more rational approach is for landowners to purchase private insurance to protect themselves from natural hazards such as floods, or to refrain from developing land in an area prone to flooding.

The need for hydroelectricity is also used to justify dams -- even though an area may not be willing to purchase the power. The Alaska Power Authority, for example, proposed hydroelectric dams on the Susitna and several other rivers, despite the fact that it didn't have contracts with the local utility companies. The reason there were no contracts was simple: it was cheaper to generate electricity by burning oil or gas. However, since the federal government provides private developers of hydroelectric dams with not only cash subsidies but guaranteed markets (whether or not the power is actually used), hydroelectric dams have a way of being built.

Electric power is obviously important to a developing region, but the question which should be asked is whether the electricity will be purchased at rates sufficient to pay for the dam. Only a free market can determine that issue in a fair manner. Hydroelectric dams should be constructed by utility companies, or by private developers planning to sell the electricity to utilities, who are willing to pay the huge sums necessary in the hopes of making a profit -- with no assurances from the government that it will provide a market for the power generated.

Federal dam builders also cite the need for irrigation. But Federal irrigation projects often amount to enormous agricultural subsidies -- water that may have cost the government $70 to $100 per acre foot to develop is sometimes sold to the farmer for as little as $3 to $4 per acre foot. Furthermore, these water projects themselves often destroy farmland -- it is sometimes suggested that the Bureau of Reclamation has dug up and drowned more farmland than it has ever irrigated.

The decision of whether to build a dam for irrigation purposes is made simple by a free market approach. If farmers are willing to pay the price of the water necessary to recoup the costs of the dam, then the dam should be built; if not, the dam should stay on the drawing board. Let private investors decide.

In a free market, no dam would be built without the consent of all the property owners involved, and without investors being convinced that it will show a profit. Isn't that how it should be?