Large dams have been an important component of infrastructure development in capitalist and communist countries alike. In 1998, changing world attitudes on large dams led to a two year World Commission on Dams and new global standards may soon insist that future projects pay fair compensation so that resettlement becomes voluntary. Now, 10 years after introduction of economic reforms, China is mobilizing its resources to build the world's largest dam. This fulfils a longstanding ambition to impound the Yangtze River in Central China at the Three Gorges and use the hydropower, improved navigation and flood control to develop the economy.

This paper examines the socio-economic impact of Three Gorges Dam on over 1.3 million people to be displaced while China is in transition to a market economy. We consider resettlement in terms of the decision-making structure, property rights and incentives to move, and how the project exacerbates problems created by market reforms, especially rising unemployment and deteriorating public health. We conclude the project is boosting economic expectations while adversely affecting large sections of the population, and this could provoke widespread social unrest and eventual changes in political institutions.

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