Wall Street History

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Wall Street History

12/21/2007

Hardly Gorgeous

A few words on the world’s largest hydroelectric plant, China’s
Three Gorges Dam project.

First approved by China’s legislature in 1992/93, with one-third
voting against or abstaining, an unusual show of dissent,
construction on Three Gorges commenced in 1994 and today is
estimated to have cost $25 billion, and counting.

The dam was built to contain the devastating annual floods along
the 4,000-mile long Yangtze River, while supplying China with a
cleaner source of electricity. Three Gorges is said to supply 10
times the power of the Hoover Dam.

But now the project is beset by all manner of problems, including
landslides, earthquakes and massive pollution and could one day
equate to the worst ecological disaster in the history of mankind.
As it is, we’re almost already there.

The other week the Chinese government, increasingly concerned
with the serious issues at hand, opted for a five-year plan for the
“orderly development of hydropower on the basis of ecological
protection.” Orderly is hardly the word to describe Three
Gorges’ construction and impact on the surrounding
environment.

In Sept. 2007, Chinese officials acknowledged there were
“hidden dangers” and that “If no preventive measures are taken,
the project could lead to catastrophe.”

The downstream riverbanks are being eroded and scores have
died in landslides. In one place, the large city of Chongqing, the
shores along Three Gorges (and the 400-mile long reservoir that
was created) had collapsed in 91 places.

Then you have the relocation issue, as in initially 1.4 million
were moved to make way for the dam and the reservoir, but now
the government needs to move another 4 million because of
pollution concerns.

Ah yes, pollution. What a totally disgusting place Three Gorges
must be. From the pictures, parts look quite scenic, but don’t
touch the water! Tons of untreated wastewater is pouring in
from factories and farms and because the pollution isn’t then
flushed out into the sea as before, it sits in stagnant water as
poisonous algae takes over. Beijing is spending $5 billion in an
emergency program to build hundreds of sewage-treatment
plants and garbage-disposal centers, but we all know enough
about China by now to understand that much of what the
government says on the environmental front can be taken with a
grain of salt.

But just in the past few weeks some China experts have begun
speaking out. Shi Jiangtao had the following in the South China
Morning Post on Dec. 17.

“In a bid to distance himself from the project, a former top water-
resources official who voted in favor of the dam recently made a
rare admission that he had had serious reservations about its
feasibility and ecological hazards.

“He said that given its huge financial, environmental and social
costs, the Three Gorges Dam was apparently the most expensive
– yet far from efficient – solution to taming the Yangtze floods.
‘For example, it should have been more effective and cheaper to
build several smaller dams on the Yangtze’s tributaries,’ he said.

“But the damming of China’s longest waterway was finally
approved in 1992 for political and arguably practical reasons, he
said.

“The mainland’s highly centralized system meant bigger projects
were favored, while smaller and less expensive solutions often
failed to impress politicians craving for greatness, he said.

“But he expressed concern over the grave consequences of
seasonal fluctuations in the reservoir’s water levels and the effect
of the faster flow of water discharged from the dam on
downstream embankments. He noted that geological disasters,
such as landslides, had been on the rise .

“Liu Shukun, a professor of hydraulics at the China Institute of
Water Resources and Hydropower Research, said the push for
big dams like the Three Gorges has over-emphasized human
water needs while ignoring ecosystem conservation.

“Citing a government-backed report on the Yangtze, he warned
against dozens of hydroelectric dams already built or planned on
the upper reaches of the river and its tributaries driven by the
demand for energy.

“Both Professor Liu and Fan Xiao, a Sichuan-based geologist,
challenged the official line that the dam project, built in an area
prone to geological hazards, had not exacerbated earthquakes and
landslides.

“ ‘The rise of water levels in the dam reservoir has made the
saturated mountainsides more unstable and triggered additional
geological risks, which has left local people more vulnerable to
potential disasters,’ said Professor Liu.”

I have argued in my “Week in Review” column the past year in
particular that pollution is a critical issue in China in terms of
relations between the government and its people. There is
irrefutable evidence the people have increasingly had it. And, of
course, the upcoming Olympics, with the world press in Beijing
and the rest of the country (if the government honors its
commitment to let them roam) will be shining a light on the
growing disaster represented by China’s environment.

Lastly, just a note on the Chinese sturgeon, one of the oldest
species on Earth that has existed for more than 200 million years.
In 1981, there were 5,000 migrating on the Yangtze. Today,
there are said to be just 300 thanks to the worsening pollution.

Additional source: A series of articles by the Wall Street
Journal’s Shai Oster.

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On a separate note, I couldn’t help but pass along some statistics
I saw in USA Today this week concerning air travel. The
holidays, despite all the publicity they receive, are far from the
busiest air travel days of the year.

For example, in 2006, Nov. 22, the Wednesday before
Thanksgiving – considered the busiest day of the year – ranked
as the 36th busiest, according to the Bureau of Transportation
Statistics (BTS) and the Federal Aviation Administration. Also
in 2006, the Thursday and Friday before Christmas – Dec. 21 and
22 – ranked as the 23rd and 24th busiest air travel days of the
year.

You might find that a bit surprising. On the other hand, the
Friday before Labor Day ranked 14th for most flights.

As Alan Levin of USA Today put it, here’s the bottom line:
“taking a flight on virtually any Thursday or Friday during the
summer is worse. Seats are just as packed, there are more
flights, and there is a greater likelihood of being delayed, due
primarily to thunderstorms and volume.”

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The next Wall Street History will be Jan. 2 with all the yearend
return figures for 2007.

Merry Christmas and Happy New Year.

Brian Trumbore

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