Russia blew up the Nova Kakhovka dam. How will it affect Ukraine’s economy?

The Kakhovka hydroelectric power station collapsed overnight on Tuesday after Russia blew it from the inside – something Kyiv warned of as far back as last October.

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Commissioned in 1955, the Kakhovka HPP was the last dam constructed on the Dnipro riverbed. It created the Kakhovka reservoir upstream, leading to the water level on its territory rising by 16 metres.

Such destruction violates the Geneva Convention relative to the Protection of Civilian Persons in Time of War of 1949.

All four Geneva Conventions, including this one, were ratified by the Soviet Union, and after its breakup, by Russia. That’s why Russians did not take responsibility for the dam’s collapse and are trying to shift the blame to Ukraine’s Armed Forces.

The explosion has led to an indiscriminate damage to a large number of people, first of all civilians. It will bring about a catastrophe both in the short term, such as flooding of settlements on both banks of the Dnipro River, and long-term negative consequences related to the environment and economy of the region.

Below, takes a look at the purely economic consequences of Russia’s latest terrorist act.

1. Destruction of Kakhovka HPP as a generation plant

The Nova Kakhovka dam is completely destroyed and cannot be restored, Ukrhydroenergo, the hydroelectric power plant operator, said in a statement,

The Kakhovka HPP had six hydroelectric units with a total capacity of over 330 MW – a third of what the city of Kyiv needs.

The plant was occupied by Russian troops on the first day of the full-scale invasion in February 2022. Last November, they announced the plant had stopped generating electricity.

However, it is an extremely important facility for Ukraine's power system.

Hydropower plants are peaking power plants; that is, they can generate electricity during peak consumption hours, when the base load carried by nuclear and, partly, thermal power plants is not enough.

Ukraine’s power system has now lost 330 MW of peak capacity forever.

2. Risks for Zaporizhzhia NPP

The Zaporizhzhia nuclear power plant (ZNPP) is the largest nuclear power plant in Europe, with six power units of 1000 MW each. Its nuclear reactors are cooled by a pond filled from the Kakhovka reservoir, formed by the Kakhovka HPP.

The ZNPP is currently under occupation, and its power units are currently in a state of ‘cold shutdown’, meaning the reactors continue to have nuclear reactions to refuel, but the plant does not generate electricity.

If cooling of the reactors stops now, their temperature will reach critical levels in about a day, leading to their destruction and leakage of radiation.

Energoatom, Ukraine’s atomic agency, says that despite the risks, the situation is currently under control. Separately, the UN’s International Atomic Energy Agency assured the collapse of the dam posed no immediate nuclear safety risks to ZNPP.

3. Destruction of agriculture in southern Ukraine

The Kakhovka reservoir, formed by the Kakhovka HPP, was a source of technical water for irrigation in the Zaporizhzhia and Kherson regions in southern Ukraine.

Its shallowing will lead to problems with irrigating agricultural land, and growing crops there would be more and more difficult.

4. Dnipro River navigation issues

Before the full-scale war, Ukraine was actively developing cargo shipping on the Dnipro River.

Since 2017, it was a tradition to send a barge with watermelons from Kherson to Kyiv. And most importantly, this route was actively used to export grain in the other direction.

The area was developed by the Ukrainian agricultural holding Nibulon, whose founder, Oleksii Vadaturskyi, was killed in a Russian missile attack in July 2022.

The change in the region’s hydrological landscape will make it impossible to navigate the Dnipro-Black Sea route for years.

5. Fisheries' loss

Such disruption of the ecological balance due to the shallowing of the Kakhovka reservoir will lead to massive fish kills.

This will affect the volume of commercial fish catch, even post-war.