Removing a dam can restore a river or stream to more natural conditions, improving water quality and aquatic habitat, enhancing river recreation, and opening up passage for anadromous fish. In addition to these environmental benefits, it can also eliminate a potential failure hazard, as many dams in the United States were built decades ago—even, in some cases, more than a century ago—and are in need of repair. Some of these dams no longer serve a valuable function, so removal could be a more cost-effective option than repair for the owner. Some studies have compared repair to removal costs for dams that have eventually been removed and found that repair costs are two to three times higher (Born et al. 1998; ICF Consulting 2005; Massachusetts Division of Ecological Restoration 2015).
Finding money to pay for dam removal is a challenge, however, and often one of the biggest hurdles. Even small dam projects can cost $100,000 or more, and larger dams or those with sediment management requirements, additional infrastructure, or other special circumstances can have project costs well into the millions. Costs include not only the deconstruction itself but securing the appropriate permits, undertaking historic mitigation activities (often required for very old dams), and doing environmental assessments. If sediment is contaminated, there may be hazardous materials requirements. Sometimes, even uncontaminated sediment that has built up behind a dam must be removed before deconstruction, which adds to project costs.
This issue brief summarizes possibilities for who might pay for dam removals and the logic behind each possibility. It sets the stage for three forthcoming companion issue briefs that discuss in more detail (i) federal funding programs, (ii) state and local funding approaches, and (iii) funding by permittees under Section 404 of the Clean Water Act or by responsible parties under various federal and state laws that require compensation for natural resources damages.
Funding for dam removal has always been a challenge. In 2000, the nonprofit advocacy group American Rivers published a guide to funding sources, discussing various cost considerations, how combinations of funding can be pulled together for removal projects, and examples of successful projects. Some states, including Massachusetts and New York, have provided fact sheets and websites with information for dam owners on potential funding sources (Massachusetts Executive Office of Energy and Environmental Affairs 2007; New York State Department of Environmental Conservation n.d.; US Fish and Wildlife Service 2008). Our series of issue briefs updates some of the information in these publications but also steps back to take a look at the logic behind various options, discuss potential revenue sources for state and local programs, and cover additional funding approaches not included in these publications, such as Section 404 permittee and responsible party funding. We also offer observations about how to modify federal programs to be used more for dam removal.