Economic considerations module: introduction | construction costs | operation and maintenance costs | safety and other liability risks | property value | recreational value | aesthetic value | ecological value | references | appendix

Safety and other liability risks

Repair

Although repairing the dam will reduce the safety risk that most dam owners will incur, there are still many liability risks and costs to consider. The first liability is at or near the dam itself. The second liability results from the potential for downstream property damage should the dam fail.

Dam owners are liable for personal injury to visitors or trespassers at the dam. Downstream of dams scour holes might have formed when the high energy, very erosive water leaves the impoundment over or through the dam. These holes have traditionally been popular for fishing and swimming for individuals in the community. These scour holes are also very dangerous. Turbulence and back currents can trap swimmers in the holes. Consequently, many communities have had drownings as the result of people being where they shouldn’t be.

Dangerous scour holes represent a potentially large liability to the dam owner. Fencing and “NO SWIMMING” signs may need to be erected as well as additional measures to stop these activities. Signs may also need to be erected upstream of the dam to warn canoeists of the dam. The risk of paddlers going over the dam is a significant one that needs to be assessed. Regardless of measures taken to restrict access to the dam itself, there will almost certainly be some activity at the dam site. Any personal injury at the dam will leave the owner liable, which is a cost that should be considered when repairing a dam.
 



Figure 5. High-energy flow of water over the former Rockdale Dam erodes a scour hole. (Photo courtesy of Tom Hooyer, Wisconsin Geological and Natural History Survey.)


Figure 6. Water flowing over the top of a dam erodes a scour hole at the base of the dam.
 
 


Estimating a cost for this type of potential liability is not easy. The best guideline may be to understand your dam and river system as well as possible to determine how much risk there may be. In this regard, the past may be a good indicator. For example, if you know there have been many accidents at the dam over the past 20 years, then you have evidence of a potential problem and will want to adjust your risk estimate accordingly. Estimating the value of an injury or wrongful death lawsuit may best be accomplished by talking to an attorney in the community. Juries and judges differ greatly between various regions, and an experienced lawyer in your area will be able to provide the most accurate estimated figure for these risks.

In this liability cost estimate you will have to consider the issue of risk raised in the introduction to this module. For example, if you estimate that if an injury occurs at the dam, it might reasonably lead to a $10,000 jury verdict, but you also believe that the history of the dam shows that an accident is very unlikely, you would probably not want to include the entire $10,000 cost in your worksheet. Instead, you should include some portion of that cost to account for uncertainty. One standard way to consider this issue is to calculate an expected one-time cost, as the following example demonstrates:

(5% chance of 1 accident sometime in next 10 years) x ($10,000 "cost" of accident) = ($500 expected cost)

The second major liability associated with dams is the potential destruction of the downstream environment and property should the dam fail and send water from the impoundment downstream. Many times there are a significant number of houses in the floodplain of the river downstream of the dam. Stipulations can be made, as part of a dam repair, that downstream homes must be moved out of the floodplain to satisfy building regulations. This could potentially be a very expensive cost associated with dam repair. Again, you can estimate these costs by doing a thorough investigation of your dam's situation to determine how likely a dam failure is and how much property is potentially as risk. Then you should account for the uncertainty of a dam failure in your monetary calculation in the same way described in the previous paragraphs. Another less expensive but probably more likely liability is that associated with properties around the impoundment that may experience flood damage as the result of improper dam operation.

Dam owners will almost certainly need some type of insurance to protect against the liabilities at the dam site and downstream from the dam. These insurance policies, according to the Wisconsin Department of Natural Resources, are umbrella policies with very large deductibles than can be as high as $1 million (Born and others, 1996). After an annual insurance payment is calculated, you will want to adjust this continuing and ongoing cost so that it can be compared to one-time expenses. (See the Operation and Maintenance Costs section of this module for more detail about how to do this.) The following example demonstrates how this calculation might look using the 10-year time frame discussed earlier:

(10 years of insurance payments) x ($1000 annual premiums) = ($10,000 total cost consideration)

Examples: Repair

Waterworks Dam, Baraboo River, Wisconsin
• Dam Failure Analysis: $16,500
• Emergency Action Plan: $5,500
• Liability insurance: $5,000 per year
 Hatfield Dam, Black River, Wisconsin
• “The most severe property damage recorded in recent years resulted from the failure of a dam in northwestern Wisconsin’s Jackson County in 1993, when water overflowed a portion of a power canal on the Hatfield dam above Black River Falls and knocked out a levee downstream, flooding a large part of the city, damaging homes and other property.” Source: Wisconsin State Journal, 6/7/98.
Bloomer Dam, Duncan Creek, Wisconsin
• Insurance and liability costs: unspecified
• Removal of homes in flood plain: $1,200,000
Ward Paper Mill Dam, Prairie River, Wisconsin
• Flood insurance necessary for approximately 40 homes downstream, and 70 homes surrounding the impoundment, based on recent floodplain mapping
• Damages of $100,000 from June 1996 flood above dam due to improper dam operation
Shopiere Dam, Turtle Creek, Wisconsin
• Incident of a swimming-related death near the dam.
• Swimming (mostly by children) in the scour hole despite “no swimming” signs
Fawell Dam, Chicago River, Illinois
•  “Warrenville City Council members say they are bracing for the possibility of flooding from a future repair of the Fawell Dam near the city. The dam repair, which is being launched by DuPage County and the state, is meant to curb flooding downstream in nearby Naperville along the West Branch of the DuPage River. But Warrenville city officials believe the repair, while alleviating flooding in Naperville, could increase flooding in Warrenville …. [An alderman] said the repair threatens to ‘make the river much bigger than it is now’ near Warrenville because of the additional flood water it will hold.” Source: Chicago Daily Herald, 6/16/98.

Removal

Removal of a dam eliminates nearly all liability risks for the owner. One possible liability a dam owner could have, as the result of removal, is the release of unknown toxic sediments downstream. This likelihood of this liability is decreased greatly by rigorous pre-removal investigations of the impoundment and previous land-use activities around the impoundment.

A negative effect on the groundwater resources near the impoundment is a potential risk associated with dam removal. Groundwater and surface water are connected resources, so dams change not only the surface-water hydrology of a river system, but also the groundwater hydrology. (See the hydrology section of the Dam and River Ecosystem Basics module for further details.) If the dam is removed (assuming no other hydrologic changes), the groundwater table near the impoundment will drop after the impoundment is drawn down, and shallow wells near the impoundment will see a drop in their water levels. Very shallow wells may even go dry, and would need to be replaced with deeper wells. Any past draw downs (such as for maintenance work on the dam) of the impoundment may indicate whether or not there is a possibility that nearby wells will go dry. Again, if potential problems are identified with local wells, you may have to consider the costs of drilling new wells for local citizens deprived of their source of water.
 


Figure 7. An artificial impoundment creates a groundwater mound near the impoundment.
 


Figure 8. The groundwater that flows into a stream is called the stream’s baseflow.


Another consideration, although the dam owner may or may not be liable, is the effect of dam removal on groundwater movement at contaminated sites. Because drawing down the impoundment will change the nearby water table, changes in the direction and speed of groundwater flow may occur. If there are groundwater contamination sites near the impoundment, the changes in groundwater flow caused by drawing down the impoundment will require, at the very least, a reassessment of present or planned groundwater cleanup activities.

For example, a change in the groundwater flow may require adding new wells in different areas to pump contaminated groundwater. Because groundwater cleanup programs can be very expensive, a study should be performed to predict potential problems before the impoundment is drawn down. If a problem is identified, you should obtain a cost estimate from an engineering consultant.

If your dam is used for flood control purposes, then removing it may have a negative impact on downstream plots that may be threatened by future flooding. In fact, in this case, you could expect downstream owners (who may be people who don’t even live within the boundaries of your community) to be very concerned about the removal option.

Examples: Removal

Oak Street Dam, Baraboo River, Wisconsin
• Removal (by Alliant Energy) of coal tar contamination in the impounded sediments from historic operations of a coal gasification plant
• Necessary to re-examine a groundwater contamination site near the impoundment with the changes in the groundwater hydrology after dam removal
Deerskin Dam, Deerskin River, Wisconsin
• Would allow Vilas County to avoid enforcing the floodplain planning ordinance downstream of the impoundment
North Avenue Dam, Milwaukee River, Wisconsin
•  “The city of Milwaukee wants to remove the center portion of the 150-year-old [dam], which it owns, allowing the river to form a more natural channel downstream of Capitol Drive. Before the dam can be removed permanently, however, more than 750,000 cubic yards of contaminated sediment that has accumulated behind it must be covered to prevent floods from flushing the pollutants downstream to the Milwaukee harbor and Lake Michigan.” Source: Milwaukee Journal Sentinel, 3/7/97.
Ward Paper Mill Dam, Prairie River, Wisconsin
• Necessary to re-examine two groundwater contamination sites near the impoundment with the changes in the groundwater hydrology after dam removal
• Seven shallow wells near the impoundment dry after dam removal
Shopiere Dam, Turtle Creek, Wisconsin
• Elimination of hazardous and potentially liable swimming area in scour hole

 

Next section: Property value

URL: http://www.ies.wisc.edu/research/wrm00/econsafe.htm