What Hirschman’s Hiding Hand Hid in San Lorenzo and Chixoy

Implementation of big water projects requires that their funders, contractors, and government officials will move projects forward ignorant of their potential social and environmental costs. Economist Albert O. Hirschman raised the issue of ignorance in a widely-read analysis of the factors driving the project process in Latin America, Africa, Asia, and southern Europe. This ignorance, which Hirschman referred to as ‘the hiding hand,’ led to creativity in the case of the San Lorenzo irrigation system in northern Peru, but had lethal consequences in the case of Guatemala’s Chixoy dam project. While Hirschman saw what he called ‘the hiding hand’ as accidental, examination of documents related to large hydraulic infrastructure projects in Peru and Guatemala suggests that in the late twentieth century it was systematically produced by resistance on the part of international financial institutions to addressing the broader political context for project development, or to adequately addressing potential social and environmental impacts early in the project process.