James Bay Dam, Electricity and Impacts (JAMES)



          CASE NUMBER:         91 
          CASE MNEMONIC:      JAMES
          CASE NAME:          James Bay Project

A.        IDENTIFICATION
1.        The Issue
      Since its inception in 1973, the James Bay Project, which
involves damming several rivers and flooding territory, has
increasingly come under the scrutiny of the international
community.  The region of this project is also home to the Cree and
Inuit Indian tribes. Originally conceived as an avenue for
Quebecois independence and self-sufficiency, it has now become the
center of controversy in the Canadian political scene.  The media
criticize the series of large development plans for their
environmental and social implications, environmentalists and, as of
recently, importers of electric power in the U.S.  Moreover, the
James Bay Project embodies the ongoing friction between the
Province of Quebec and the government of Canada.
2.        Description
     On the evening of April 30, 1971 Quebec Premier Robert
Bourassa unveiled plans created by Hydro-Quebec, the state-run
electric company, for a hydro-electric project that would dam
several rivers in Northern Quebec, create tens of thousands of jobs
and create a new trade base for Quebec in surplus power for export
and to entice investment in extractive industries.  Two months
later, the feasibility study being conducted by Hydro-Quebec had
not even been completed, but the construction of roads into the
James Bay Area began.  Bourassa saw this project as a way of
creating much needed jobs and increasing the economic autonomy of
the Province.
      The James Bay Project became controversial because of the
considerable stakes involved.  Hydro-Quebec, the state-owned
utility company that has supervised the construction, is the
primary engine of economic growth for Canada's Francophone
province.  Hydro-Quebec's venture is a means for achieving a
certain independence from Canada.  Likewise, the Inuits and
especially the Cree Indians maintain that they will violate their
right to self-determination if they expand the project (see BABYSEAL and ECFURBAN cases).  The environmental risks
are also central to the controversy.  Flooding the area to create
artificial lakes will alter an already fragile ecosystem.  Species
especially at risk include the Beluga whale, several migratory
birds and fresh water seals.  Since the 1970s repeated, the Cree
and environmental groups against Hydro-Quebec have initiated law
suits.  In addition, several contracts between U.S. utility
companies and Hydro-Quebec have fallen through.  James II has been
delayed due to pressures domestically and at the international
level for a joint federal-provincial environmental impact
assessment.
      Northeastern Canada has, per unit of surface area,  more
flowing water than almost anywhere else on the globe.  It is in
the many rivers flowing into the James Bay and Hudson Bay that
industrialists and politicians saw the potential to spur economic
growth in the traditionally backward Province of Quebec.  Hydro-
Quebec, government owned since 1963, embarked on a mission to
transform the natural waterways into a system of dams and
reservoirs to generate electric power for Canada and New England. 
The first phase of the project, James I, or the La Grande Project,
resulted in three power stations capable of generating 10,282
megawatts of energy at a cost of $13.8 billion.  Although the La
Grande Project is still underway (six more power stations are to be
built), the next major stage in Hydro-Quebec's plans is to build a
complex at another location, on the Great Whale River.  This
project, known as James II, is stimulating the most debate,
worldwide.
      Proponents of this colossal scheme argue that large amounts
of electricity are needed for Canadians, who warm their homes and
businesses with electric power, and for the U.S. which will be
seeking alternatives to polluting coal power plants and
controversial nuclear power plants.  They maintain that
hydroelectric power is environmentally sound in that it is
renewable and does not contribute to global warming.  For French-
Canadians, Hydro-Quebec is a source of pride for its innovations in
hydroelectric power and its contribution to economic growth.
     The magnitude of the project represents the greatest threat to
the environment.  The Great Whale project would flood 5,000 square
kilometers of land in an area in which 12,000 Cree and 5,000 Inuit
live.  Cree and environmentalists have pointed out that the areas
to be flooded are the only areas suitable for the native animals. 
These animals, including caribou, snow geese, marten, beaver, black
and polar bears and elk are at risk of losing their habitat. 
     Decomposition of trees as a result of flooding creates a
highly toxic form of mercury, methyl-mercury, which is passed down
the food change.  People whose diets are based on fish are
poisoned, as are other endangered species, notably the Beluga whale
and the fresh water seal.  One cocnern is about destroying the
balance of a complex hydraulic cycle which is not completely
understood, but known to contribute to weather patterns.  Hydro-
Quebec has also indirectly harmed the environment through its
secret contracts with aluminum companies and other polluting
customers who buy underpriced power.  This costs the utility and
taxpayers between $1.5 and $10 billion.
     Hydro-Quebec's venture, and the support it receives from the
Quebec government are directly threatening to the indigenous
population in Northern Quebec.   Since Europeans first settled
Northern American, the Cree and the Inuit have been forced to
relocate further North each time a discovery of a marketable
resource was made.
     Since the early 1970s the Cree has been struggling to protect
their lands or at least receive compensation.  The 1975 James Bay
and Northern Quebec Agreement between Hydro-Quebec and the Indians
was thought to be a solution to the conflict between the two
interests.  However, the Cree believe the utility company has
violated the agreement by not performing environmental impact
assessments and by beginning the construction of more plants
despite low demand.  Hydro-Quebec contends to the contrary, that it
was understood in the agreement that the company could complete its
foreseen project, including one on the Great Whale River.
     A recent Supreme Court decision in Ottawa illustrates the
tensions between Quebec's drive for independence and the drive for
self-determination by the Cree.  In 1990, the National Energy Board
granted Hydro-Quebec a license to export electricity to New York
and Vermont provided that the production of electricity did not
conflict with relevant environmental standards and that an
environmental assessment was performed (by the national government)
to determine that there were no violations.  Quebec appealed this
decision on the grounds that the whole James Bay Project was being
subjected to federal control and eventually won.  The case was
brought to the Supreme Court by the Cree.  The Court ruled that a
federal review of Hydro-Quebec dams is required, if they are
connected to export contracts.  Although a victory for the Cree,
they could not convince the Court that licenses to export be
completely revoked.  Moreover, the Court has given Hydro-Quebec
permission to begin construction of yet another dam (Ste.
Marguerite).
3.        Related Cases
     Keyword Clusters
     (1): Trade Product            = POWER
     (2): Bio-geography            = COOL
     (3): Environmental Problem    = HABITat Loss
4.        Draft Author:  Mary-Ellen Foley and Andrew Hamm
B.        LEGAL Clusters
5.        Discourse and Status: DISagreement and INPROGress
      Under the James Bay and Northern Quebec Agreement of 1975,
the indigenous population was given 1.3 percent of the land in
question, $500 million compensation and a political voice reflected
in a regional government.  The Crees and Inuits were also to
participate in reviewing impacts of the project.  In return, Hydro-
Quebec received the right to continue its large scale project. 
However, since this time, numerous proceedings have taken place --
in Quebec and also in the U.S. to prevent contracts to be made for
trade in electricity.  The James Bay and Northern Quebec Agreement
is appropriate to resolve domestic disputes, whereas eventually
NAFTA could be used to negotiate differences centering around
export bans.  At the moment, however, lawsuits, hearings and
proceedings have been occurring at the provincial level.  
6.        Forum and Scope: NAFTA and REGION
     NAFTA could the forum for eventual dispute resolution (see NAFTA case).  The Commission for
Environmental Cooperation would hear any cases involving the
environmental implications of trade in electricity originating from
Hydro-Quebec.  Under NAFTA, the U.S. cannot discriminate against
Canadian electricity because of how it is produced (product vs.
process).  That generating electricity may be environmentally
unsound in Canada, is a matter to be left to be resolved by Canada
alone.
      The North American Agreement on Environmental Cooperation
does obligate countries to strive for improvement of domestic
environmental regulations, to enforce their environmental laws and
to maintain transparency by having all rulings open to public
access, including reports on the state of the environment.   The
Commission is to be a clearinghouse for not only governments, but
NGOs.  Cross-border pressure of environmentalists on Hydro-Quebec
will most likely become stronger.
7.        Decision Breadth: 1 (CANADA)
8.        Legal Standing: LAW
     Groups are forming networks to lobby against the James II
project, including the James Bay Defense Coalition and the New
England Energy Efficiency Coalition, coal mining interests in the
United States and political activists in both Canada and Northern
U.S. states.  In the early 1990s, the Sierra Club, PROTECT and
the Crees took legal action (to no avail) against the New York
Power Authority arguing that imported electricity should be subject
to similar environmental standards as in New York.
     In the push for public awareness, the Cree and Inuit have
appealed to the people in the U.S. states to which Hydro-Quebec
would sell power.  The states in New England provide Hydro-Quebec
with huge potential markets for the power generated at James Bay,
and because of rates artificially inflated to subsidize power costs
for Quebecois, these states represent a huge potential profit.  By
appealing to the citizenry of these states, the Cree have a chance
to take from Hydro-Quebec a portion of its potential revenue.  In
New York, former Governor Mario Cuomo canceled an estimated $17
billion contract with Hydro-Quebec when the New York State
Legislature passed a law requiring the state to explore
conservation and alternative energy sources before importing
power.  Other power companies claim that there will be little or
no need for Quebec power in their service areas, and that they too
will market surplus power to companies in neighboring states. 
This will further reduce Hydro Quebec's justification for expanding
production facilities in the James Bay area.  
C.        GEOGRAPHIC Clusters
9.        Geographic Locations
     A.   Geographic Domain:  North America [NAMER]
     B.   Geographic Site:    Northern North America [NNAMER]
     C.   Geographic Impact:  CANADA
10.       Sub-National Factors: YES
      Jurisdiction is at the sub-country level, in Quebec.
11.       Type of Habitat: Snow forests, taiga  [COOL] 
D.        TRADE Clusters
12.       Type of Measure: Regulatory Ban [REGBAN]
13.       Direct vs. Indirect Impacts: DIRect
      Several U.S. states have canceled contracts with Hydro-Quebec
have done so in response to pressure from environmental groups and
because of an ongoing glut in electricity use (which means the need
for exported electricity has diminished).
14.       Relation of Trade Measure to Resource Impact
     A.   Directly Related:        YES MINE
     B.   Indirectly Related:      YES ELECTricity
     C.   Not Related:             NO
     D.   Related to Process:      YES HABITat Loss
      The construction of dams results in displacement of the local
population and species loss.
15.       Trade Product Identification: POWER
     The original plan for Phase 1 called for the building of four
powerhouses with dams and the flooding of more than 10,000 square
kilometers of land along the La Grande river, Quebec's third
largest river, and the largest river flowing into the James Bay. 
As completed, Phase 1 of the project has a generation capacity of
over 10,000 megawatts of power and cost an estimated $16
billion.  When phase two is completed in 1995, the total
generating capacity of the La Grande complex is expected to be
15,000 megawatts.
     This project, it was thought, would be good for Quebec. 
Thousands of jobs would be created, the power needs of the province
would be taken care of, and there would even be a chance to export
power to the United States, whose power systems were beginning to
get old and expensive to operate.  Additionally, hydro-electric
power has always been thought of as relatively inexpensive in the
long run, and, apart from the destruction of habitat from flooding
reservoirs, environmentally sound.
     The second part of the James Bay Complex, known as James Bay
II, calls for the development of generators along the Great Whale
River to the north of the La Grand, and the combination of the
Nottaway, Broadback, and Rupert Rivers to the south.  Hydro-
Quebec sees the development of these rivers as necessary for
keeping up with the future power needs of Quebec.  According to
Maclean's Magazine, Hydro-Quebec claims it will need an increase in
generation capacity of 8,000 megawatts.  But, this need should
be satisfied by the production capacity at the La Grande Complex. 
It appears that Quebec-Hydro would use the extra capacity for the
sole purpose of exporting power to the United States.  In doing
this it overcharges its U.S. customers, and artificially lowers the
cost of power to people in Quebec.  By the year 2006, the power
company hopes to increase power exports to the U.S. to 9.5 percent
of total sales from 1.5 percent in 1991.
16.       Economic Data
      Hydro-Quebec was, in 1990, Canada's third largest company
with $36 billion in assets.  Its annual revenues are at $6 billion
and it employs 23,000.  
17.       Impact of Measure on Trade Competitiveness: MEDium
      Export earnings are only about seven percent of Hydro-
Quebec's total revenues.  In 1992, the New York Power Authority
canceled a $12.6 billion contract for a year-round supply of 1,000
megawatts of power and is considering the rejection of a twenty
year, $5 billion contract to buy electricity from Quebec because of
possible environmental damage in Canada and because of the drop in
demand and electricity prices in New York.  This would result in
a net loss of $17.6 billion for Hydro-Quebec.  Exports are a
central part of Hydro-Quebec's decision to create mega-projects
such as James Bay and Great Whale the export market.  If the U.S.
were to limit its imports of electric power, rather than increasing
its imports (as is predicted by Hydro-Quebec) and James II is
completed, costs will be considerably higher.  
      Demand for Hydro-Quebec power has grown only 3.8 percent last
year contrary to the expected 5.7 percent.  The drop will cause
Hydro-Quebec to drop contracts at a cost of between $9 and $20
million.  The Grand Whale Project, originally planned to be in
operation by 1996, has been postponed to until 2003.  The New York
Power Authority has stated that any new contract to be negotiated
"will not provide a market directly or indirectly for the
construction of the Great Whale project."
18.       Industry Sector: UTILitiy
19.       Exporters and Importers: CANADA and USA
      Hydro-Quebec sells $100 million worth of electricity to New
York a year.  It is close to signing a $3 or $4 billion contract
with Consolidated Edison Utility, which supplies New York City.
E.        ENVIRONMENT Cluster
20.       Environmental Problem Type: HABITat Loss
      Reservoirs built on the La Grande complex first submerged
83,000 kilometers of stream and lake banks, and then, 12,000 square
kilometers of forest.  Because the water levels in reservoirs
fluctuate according to demand -- going down in the winter and
rising in the summer -- nature does not have a chance to replace
lost wetland habitats.  A loss of a habitat implies a loss of
species.
     This issue is similar to others around the world.  People in
many nations, such as Egypt and India, have been displaced as a
result of hydro-development.  In some cases, the result was bloody:
in Binar, India, the Santal people were subject to government
reprisals killing 8 demonstrators.  Whether for agriculture or
for hydro-electric power, the building of dams and the creation of
reservoirs, in addition to the flooding, can come with other
problems (see HUNGARY case).  In
high erosion areas, the river can become very silty, fouling
turbines as well as destroying habitat downstream; the enormous
pressure of water retained in reservoirs can create seismic
hazards; and decomposition of vegetation left in flooded areas can
release greenhouse gasses as well as concentrating naturally
occurring methyl-mercury in fishing areas, where contaminated fish
are then eaten by the local population.
     The level of mercury in the environment is already well above
those internationally regarded as being safe, and the number of
cases of mercury contamination exceeds World Health Organization
standards (also a problem in the BRAGOLD case).  Hydro-Quebec
believes that other than the habitat damage from the reservoirs,
there will be little adverse environmental and social impact, and
that mercury levels will drop in 20-30 years.  Others estimate
that the mercury levels in the reservoirs will not drop for 80-100
years.   Studies conducted at the Experimental Lakes Area, in
northwestern Ontario, found that hydro-electric dams, like those
that Hydro-Quebec have created in the James Bay Area, emit as much
greenhouse gas as a fossil fuel plant.
21.       Name, Type, and Diversity of Species: MANY
     Name:          Many
     Type:          Many
     Diversity:     1,059 higher plant
                    species per 10,000 km/sq
                    (Canada)
     Species threatened by the project include the following.
          1.  Beluga Whale
          2.  Fresh Water Seal
          3.  Fresh Water Fish
          4.  Migratory Birds, Water Fowl
          5.  Caribou 
      The most infamous example of wilderness loss is that of the
10,000 caribous which drowned while attempting to cross the
Caniapiscau River.  Their deaths were due in part by too much water
spilling from the Caniapiscau reservoir.  
      In the St. Lawrence estuary only 400 Beluga whales were left
in 1989 (see ESKIMO case).  They
are repeatedly found dead, laden with chemicals.  Methyl-mercury,
a chemical released as trees decompose becomes more and more
concentrated in the food chain, ultimately killing large mammals. 
22.       Resource Impact and Effect:  MEDium and SCALE
      Some argue that transforming terrestrial landscape to an
aquatic landscape has not been detrimental to the environment and
that plant and animal species have adapted to the changes.  In an
effort to reforest areas stripped through construction, firms under
Hydro-Quebec have planted millions of trees and plants.  Between
1974 and 1984, 1.5 percent of the total cost of building phase one
of the La Grande complex ($250 million) was spent on environmental
protection, or rather, remediation.  However, biologists maintain
that the long-term impact of the James Bay project is yet to be
felt.   
23.       Urgency and Lifetime:  MEDium and 100s of years
24.       Substitutes:  RECYCling
      Wind power is another alternative to hydro-power considered
by Hydro-Electric.  It has an experimental, five-megawatt wind
power project on the Magdalen Islands.  Energy efficiency,
however, remains the most viable solution to building large-scale
power plants.  In the 1980s, for example, the U.S. received seven
times more energy from savings than from net increases in supply.
F.        OTHER Factors
25.       Culture:  YES
      The culture of the Crees and the Inuit is threatened, as
nomadic hunters in an environment with scarce resources, they
require large spaces of land.  Their campsites, trapping lands and
burial sites have been submerged. In addition, as development
proceeds and more Canadians inhabit Northern Quebec, the
traditional ways of the Indians are being eroded to be replaced
with the social ills of modern society.  Similar to the plight of
American Indians in the U.S., drug and alcohol abuse, crime and
sexually transmitted diseases, as well as disease stemming from
poor diets, are prevalent between the Crees and the Inuit (see LUMMI case).
     Financial compensation for their losses has made these people
dependent on the government.  Hunting is no longer central to their
existence because it is not economically viable and constrained by
the development of infrastructures.  They find themselves at the
lowest rung of society - unskilled, unemployed and uneducated and
suffering from a loss of identity and self-worth.  Ironically,
those who have struggled the most to preserve their traditional
hunting culture, have had to abandon it in order to deal with
developers and the government on equal footing.  Skills in
lobbying, law, economics and public relations are now crucial to
the Crees and the Inuit.
     When the La Grand project broke ground, none of the people in
the area, approximately 5,000 Cree Indians and 3,500 Inuit, were
even told about the plans.  Some actually found out about the
project when they read about it in the newspaper.  To this
hunting culture, the flooding of ancestral burial grounds and
traditional hunting areas would prove devastating.  In the words
of Daniel Coon Come, Grand Chief of the Cree:  "Our land is our
memory."  The International Water Tribunal ruled that Hydro-
Quebec should stop the James Bay Project in order to preserve the
rights and culture of the native people.
     Being a primarily French-speaking province, Quebec is
culturally different from the rest of Canada and has long been
desirous of independence.  Its need to remain autonomous, which
might in part be achieved through Hydro-Quebec's project, is a very
strong force driving Quebec's separatist movement.  In the pursuit
of its own cultural and economic autonomy, Quebec is denying
autonomy to the indigenous peoples of Quebec. 
     The French speaking population of Canada comprises
approximately 20 percent of its population.  As a result, the
Canadian Federal government has passed laws which make French a
second official language of the country, giving it the equivalent
status to that of English.  In Quebec, percent of the population
does not speak French, but they do not enjoy the same legal
protection that French speakers enjoy in Canada at large. 
Indigenous peoples living in Quebec fear that without federal
protection, an independent Quebec will ignore their rights.  The
Cree and Inuit claim that they will secede from Quebec if Quebec
separates from Canada, and may, in the extreme, threaten to plunge
Quebec into a civil conflict with secessionist 
native peoples.
26.       Trans-Border:  NO
27.       Human Rights:  YES
       The Crees and the Inuit have been displaced continuously,
pushed higher and higher North as Canadians discovered valuable
natural resources.  Their right to self-determination has been
compromised by the needs of a wealthy society of consumers and by
nationalist tendencies of the Quebecois embodied in Hydro-Quebec.
28.       Relevant Literature
Benesh, Peter.  "Canada's White Whales are Dying."  World Press
      Press Review.  36 (January, 1989): 56.
Boras, Alan.  "Plant Signals a Boom."  Calgary Herald.  June 19, 
      1993, Sec. A, 1.
"Cree Indians Accept Reward But Want Hydro Plants
     Halted."  Inter Press Service.  January 21, 1993.
Dale, Stephen.  "Canada:  Native Indians Fight Against Hydro-
      Electric Project."  Inter Press Service.  April 22, 1993.
Crane, David.  "Panel Targets Environmental Woes."  The Toronto
      Star.  March 29, 1994, Sec. B, 2.
Euromoney Trade Finance and Banker International.  "USA:  Hydro
     Quebec Left in the Dark."  Reuter Textline in Lexis
     Nexis, April 1, 1994.
The Gazette.  (Montreal).  "Hydro Calls Tune."  April 2,
     1993, Sec. B, 2.
Hamilton, Graeme; Authier, Philip and Heinrich, Jeff.  "Cree Beat
      Hydro in Top Court:  But Dam Project Gets Go-Ahead."  The
      Gazette.  February 25, 1994, Sec. A, 1.
Hamilton, Graeme.  "Hydro Blasts U.S. Group for Criticism of
     Dams;  Think-tank Calls Utility 'Paranoid'."  The Gazette 
     (Montreal).  January 12, 1993, Sec. A, 4.
Hydro-Quebec Urged to Harness Wind instead of Rivers."
      The Ottawa Citizen.  March 21, 1994, Sec. A, 3.
Heinrich, Jeff.  "Hydro Under the Microscope." The Gazette.
      March 14, 1994, Sec. F, 8.
Jaekl, Christian.  "James Bay:  Prometheus vs. the Environment."
     Swiss Review of World Affairs.  April, 1993.
Johnson, William.  "Blow to Quebec:  Ottawa wins in Court Ruling
      Over James Bay."  The Gazette.  February 25, 1994, B3.
MacDonald, Gayle.  "Megaprojects Lose Energy:  A Chilly Climate."
      The Financial Post.  December 30, 1992, Sec. 1, 36.
McCutcheon, Sean.  Electric Rivers:  The Story of the James Bay
      Project.  Montreal and New York:  Black Rose Books, 1991.
O'Neil, Peter.  "Warning from MP Jim Fulton Ignites Firestorm in
      Quebec."  The Vancouver Sun.  February 19, 1993, Sec. A4.
Verhovek, Sam Howe.  "Power Struggle."  The New York Times
     Magazine.  January 12, 1992, 16-27.
Wald, Matthew.  "Accord with Cree will allow Quebec Utility
     to Finish Dams." The New York Times.  January 10, 1993,
     Sec. 1, 30.
Walsh, Mary Williams.  "Loss of Contract Leaves Power Project in
      Dark."  The Los Angeles Times.  April 18, 1992, Sec. A, 3.

        

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