Were the hydro dams financed by the World Bank from 1976 to 2005 worthwhile? Omotola Awojobi a,n , Glenn P. Jenkins a,b a Department of Economics, Eastern Mediterranean University, Mersin 10, Turkey b Department of Economics, Queen's University, Kingston, ON, Canada HIGHLIGHTS  An ex-post evaluation is made of hydroelectric dams financed by the World Bank.  Cost overruns, time overruns, and the cost of time overruns are measured.  The PV of benefits produced by this portfolio was 1.8 times the PV of the costs.  Real cost overruns were 27% and cost of time overruns 3.5% of ex-ante costs.  Risks of cost overruns must be evaluated in relation to projected benefits of dams. article info Article history: Received 24 February 2015 Received in revised form 28 May 2015 Accepted 28 June 2015 Available online 16 July 2015 Keywords: Dams Hydropower Cost overrun Investment appraisal Energy policy World Bank abstract Because hydro dams are complex to design and usually involve long-term planning, they are particularly susceptible to cost and time overruns. The controversy surrounding their development remains an un- resolved issue in the energy policy debate. This study re-examines the cost issues associated with a portfolio of 58 dams that were financed by the World Bank from 1976 to 2005. Further, an estimate is made of the value of the benefits produced by these investments to determine the magnitude of eco- nomic rates of return for the individual projects and the overall portfolio of dams. Even though this portfolio of dams suffered substantially from cost overruns, the net contribution of these dams has been positive and substantial. The ex-post real economic rate of return for the entire portfolio is estimated to be greater than 17 percent. The important policy implication of this study is that each investment in a hydro dam needs to be appraised taking into consideration the distribution and probabilities of costs that might be incurred, as well as the potential benefits. Adequate margins must exist of ex-ante benefits over costs to account for the risks of cost overruns. & 2015 Elsevier Ltd. All rights reserved. 1. Introduction This paper analyzes the net economic benefits of a portfolio of 58 hydro dam projects that were financed between 1976 and 2005 by the World Bank and for which project completion reports are available. The study both investigates the issues associated with the cost and time overruns that are common with the im- plementation of the dams and measures the actual economic benefits created by these dams. Benefits are measured from each project’s completion until 2014 and projected from 2014 until the end of the dam’s planned useful life. The World Bank is the largest and perhaps most influential financier of this type of large infrastructure project (Bosshard, 2013). Its lending policies for dams can have a major effect on the choice of power technologies available for developing countries. Hence, while the data collected for this study are for dams fi- nanced by the World Bank, the outcome of the study is not con- fined to World Bank projects, but applies generally to dams pro- posed for developing countries, where capital resource are scarce and the decision to build should be guided by the need to achieve a least-cost electricity expansion strategy. With international efforts to meet the challenges of a stable energy future and combat climate change problems, there is a need to determine whether hydro dams can potentially serve as one instrument for meeting the clean energy policy targets. Previous studies using data from before 1986 revealed the se- verity and chronology of cost overrun problems for hydropower dams financed by the World Bank (Merrow and Shangraw, 1990; Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/enpol Energy Policy http://dx.doi.org/10.1016/j.enpol.2015.06.040 0301-4215/& 2015 Elsevier Ltd. All rights reserved. n Corresponding author. E-mail addresses: omotola.awojobi@emu.edu.tr (O. Awojobi), jenkins@econ.queensu.ca (G.P. Jenkins). Energy Policy 86 (2015) 222–232