Funding Dam Removals Through Section 404 and Natural Resource Damage Regulatory Compliance

In the fourth and final issue brief in a series on funding sources for dam removals, this paper discusses funding from entities looking to meet regulatory obligations.



Dec. 17, 2020


Issue Brief

Reading time

2 minutes


The United States has a diverse experience with dam removal. In some places, the motivation for dam removal was migratory fish passage. Opportunities to naturalize riverine flow patterns to support resident fish or improve water quality conditions motivated other removals. In some places, a dam was removed to eliminate a drowning hazard, and in other instances, removing a dam in poor condition was less costly than paying to repair it. However, more often than not, multiple motivations led to removing a dam; these varied depending on whether the dam owner was a private individual, a business, a community association, or a state or local government. The nation’s dam removal experience reflects diversity in not only motivations and ownership but also scale and cost, ranging from a few relatively large structures in major rivers to hundreds of small and sometimes partially breached dams (Walls and Gonzales). The cost to remove a dam can be significant. Small dams can cost $100,000 or more, but larger dams, often those with sediment management requirements, can run well into the millions. The cost to remove the dam itself may only be a small part of the total cost of removal. Project management extends over several years to build public support, obtain dam and landowner agreement, navigate permitting processes, and secure and coordinate multiple funding sources; nongovernmental organizations (NGOs) and staff at resource agencies make direct expenditures and provide in-kind services for project management costs.

This diversity in motivations, ownership scale, and cost understandably has allowed dam removal advocates to draw upon multiple funding sources, often for the same dam. This paper reports on two of the less well-understood sources of funding, both of which involve parties that face regulatory obligations to offset impacts to aquatic environment. These funding sources appear attractive because they do not rely on the dam owner or on payment from federal or state grant programs, which need a revenue source. One possibility is when an individual, business, or agency of government is issued a Section 404 Clean Water Act (CWA) permit to discharge fill material (pollutants) in US waters with a resulting loss of wetlands or stream habitat. The permittee must provide compensatory mitigation that will restore wetland or stream habitat in the watershed where the permit was issued, and funding dam removal may facilitate such restoration.

Another possible funding source is when a “responsible party” (RP) named in a Natural Resources Damage Assessment must compensate for damages (injury) to aquatic resources from an unpermitted discharge of a pollutant (most often a chemical spill). After state or federal agency trustees assess the damage, they decide what aquatic habitat restoration projects will compensate for the damages. The RP is directed to implement that project or to pay for its implementation by others; dam removal might be one of these projects. The use of these funding sources to pay for dam removal and the challenges for expanding the use of these funding sources are the subject of this report.

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