All development, from a road to a house to a refinery, creates environmental impacts. Hydro development is no different. Because environmental impacts affect the whole planet, all development needs to demonstrate that the environmental benefits (primarily accruing to humans) exceed the environmental costs.
In the case of hydro development, environmental concerns typically focus on the creation of a reservoir, which can act as a significant methane generator. For this reason, a reservoir should never be flooded without first removing the marketable lumber, clearing all shrubs and trees, and depositing them above the maximum flood level of the future reservoir. (Unfortunately, flooding of reservoirs without first clearing the reservoir, is a practice that continues in many third-world countries.) The piles of dry scrub are not burned, because this releases carbon dioxide (a greenhouse gas) and particulates into the atmosphere. Particulates affect air quality and the health of the population downwind. The dry scrub might be scavanged for firewood or left to rot naturally, enhancing the soil.
The construction and use of the access roads and facilities also causes environmental impacts, and the dams, power plants, substations and transmission lines all use up valuable land area. The construction of the facilities also has a carbon footprint due to the use of materials, particularly cement for concrete production. It is now common to reduce cement usage by substituting pozzolans. These are chemicals that combine and harden by reacting with the free lime released during cement hydration. The two most common pozzolans are made from waste materials – slag from blast furnaces and fly ash from coal-burning power stations.
It is a common perception that run-of-river hydro has lower environmental impact than storage hydro. This is true in come instances, but it is not a universal truth. For example studies were carried out to consider the development of multiple run-of-river hydro sites along the Peace River in British Columbia, Canada, as an alternative to the proposed Site C Dam. The studies showed that the reservoir flooding impacts were reduced, but the impact on navigation was greatly increased, as was the required land use. The site development impacts for multiple small developments exceeded the impact of Site C alone, and each station required separate switchyard and transmission facilities of a similar magnitude to Site C. The environmental benefit to society was also significantly reduced – the construction cost of the multi-site development would have been significantly higher while the total power output would have been significantly reduced.