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/* Written 6:17 PM Sep 28, 1996 by irn in ax:ax.ambiente */

Paraguayan Dam Victims File Complaint with Development Banks

International Rivers Network (IRN) press release, 28 September 1996

A Paraguayan environmental and human rights group today filed a complaint with the inspection panels of the World Bank and the Inter-American Development Bank (IDB) charging that the banks violated their own policies in funding the massive Yacyreta' Dam. The group, Sobrevivencia - Friends of the Earth Paraguay, has filed the claim on its own behalf and on behalf of residents of the Paraguayan city of Encarnacio'n, many of whom have been forced to leave their homes by the partial filling of the Yacyreta' reservoir. The claimants say they have suffered economic losses, health problems, and a degraded environment, and have called upon the banks to take immediate steps to remedy their situation.

The claim is the first to be filed with the IDB's inspection panel, and the seventh with the World Bank. The panels were established in response to criticism of the banks for their funding of projects with serious environmental and social impacts.

Yacyreta', a 70-kilometer-long dam spanning the Parana' River where it forms the border between Argentina and Paraguay, was once called "a monument to corruption" by Argentine President Carlos Menem. Although construction began in 1983 and reservoir filling started in 1994, the project has not yet been completed. Now nine years behind schedule and billions of dollars over budget, electricity produced by the dam will be three times more expensive than the market rate for power in the region.

More than 5,000 people are now directly affected by Yacyreta' Reservoir, and a total of more than 50,000 people will eventually have to be relocated. Sobrevivencia states that rising waters contaminated with rotting vegetation and urban sewage have forced people in Encarnacio'n to accept unjust resettlement provisions from the binational company, EBY, which runs the dam. Resettlement housing, according to the claimants, has been shoddily built, does not fairly compensate for the homes the people lost, and is far from their work places. Many have had to abandon small businesses and other economic activities such as fishing, for which they say they have not received fair compensation.

Damming the river has blocked fish migrations and fouled water quality, seriously reducing fish catches. Ceramic workers have lost access to high quality riverbank clay deposits which are now underwater, and mitigation plans will only temporarily provide alternative materials. Health problems, in particular respiratory ailments, fevers, diarrhea, skin ailments and intestinal parasites have increased, with children the most affected. It is feared that the future will bring increases in the incidences of diseases such as malaria and schistosomiasis.

Although Argentina will be the principal market for electricity from Yacyreta', some 80,000 hectares of wildlands, about 80% of the area to be flooded, are in Paraguay. According to the claim, areas supposedly protected as ecological reserves in compensation for land submerged are seriously inadequate and do not conform to World Bank policies. Monkeys and other animals "rescued" during the flooding of the reservoir were removed to an area on Yacyreta' Island which was designated as a compensatory reserve, but which is being cleared of vegetation for cattle ranching.

Elias Diaz Pen~a of Sobrevivencia says "We want the reservoir maintained at its current height of 76 meters above sea level until all losses suffered by local people have been compensated, and damages to the environment remedied, to the full satisfaction of all affected people."

An internal evaluation by the World Bank completed in August questioned whether the Bank should have halted their support for the project early on, in view of contract irregularities and cost overruns, and rated the bank's performance in administering the Yacyreta' loans as "unsatisfactory". The World Bank provided a total of $900 million and the IDB $840 million in loans for the project.

According to Glenn Switkes, Latin America Program Director of the International Rivers Network, "This claim provides yet another glaring example of how the true social, environmental, and economic costs of large dams are never fully assessed. Large dams are now an obsolete technology and the development banks should stop subsidizing them."

The Paraguayan claim calls on the Banks to use their influence to hold the reservoir at its current level, and to invest directly in measures to help affected populations and to protect the environment. Dana Clark, of the Center for International Environmental Law in Washington D.C. says, "The Banks have failed to respect the rights of people who have lost their homes and livelihoods and are forced to live in a degraded environment. The claimants are pinning their hopes for accountability and redress on the inspection panels."

Currently, the World Bank, IDB, and the governments of Argentina and Paraguay are discussing selling Yacyreta' to the private sector. But there is controversy in both countries as to whether the proposed sale price, $1.8 billion, is a good deal, given that the dam has cost some $8.2 billion. Dam-affected populations doubt whether a private company would implement an adequate social and environmental mitigation plan.

-30- For more information:
Sobrevivencia (Elias Diaz Pen~a/Oscar Rivas) tel/fax: +595.21.24.427 tel: +595.21.480.182
IRN (Glenn Switkes-Brazil) tel/fax +55.65.627.1689 or
Patrick McCully-USA tel: 510.848.1155 fax: 510.848.1008
CIEL (Dana Clark or David Hunter) tel: 202.332.4840 fax: 202.332.4865