Dams affect many ecological aspects of a river. Rivers depend on the constant disturbance of a certain tolerance. Dams slow the river and this disturbance may damage or destroy this pattern of ecology. Temperature is also another problem that dams create. Rivers tend to have fairly homogeneous temperatures. Reservoirs have layered temperatures, warm on the top and cold on the bottom; in addition often it is water from the colder (lower) layer which is released downstream, and this may have a different dissolved oxygen content than before. Organisms depending upon a regular cycle of temperatures may be unable to adapt; the balance of other fauna (especially plant life and microscopic fauna) may be affected by the change of oxygen content.

Water exiting a turbine usually contains very little suspended sediment, which can lead to scouring of river beds and loss of riverbanks; for example, the daily cyclic flow variation caused by the Glen Canyon Dam was a contributor to sand bar erosion.

Older dams often lack a fish ladder, which keeps many fish from moving up stream to their natural breeding grounds, causing failure of breeding cycles or blocking of migration paths. Even the presence of a fish ladder does not always prevent a reduction in fish reaching the spawning grounds upstream. In some areas, young fish ("smolt") are transported downstream by barge during parts of the year. Turbine and power-plant designs that have a lower impact upon aquatic life are an active area of research.

A large dam can cause the loss of entire ecospheres, including endangered and undiscovered species in the area, and the replacement of the original environment by a new inland lake.

Depending upon the circumstances, a dam can either reduce or increase the net production of greenhouse gases. An increase can occur if the reservoir created by the dam itself acts as a source of substantial amounts of potent greenhouse gases (methane and carbon dioxide) due to plant material in flooded areas decaying in an anaerobic environment. A study for the National Institute for Research in the Amazon found that Hydroelectric dams release a large pulse of carbon dioxide from above-water decay of trees left standing in the reservoirs, especially during the first decade after closing. This elevates the global warming impact of the dams to levels much higher than would occur by generating the same power from fossil fuels. According to the World Commission on Dams report (Dams And Development), when the reservoir is relatively large and no prior clearing of forest in the flooded area was undertaken, greenhouse gas emissions from the reservoir could be higher than those of a conventional oil-fired thermal generation plant. For instance, In 1990, the impoundment behind the Balbina Dam in Brazil(closed in 1987) had over 20 times the impact on global warming than would generating the same power from fossil fuels, due to the large area flooded per unit of electricity generated. A decrease can occur if the dam is used in place of traditional power generation, since electricity produced from hydroelectric generation does not give rise to any flue gas emissions from fossil fuel combustion (including sulfur dioxide, nitric oxide, carbon monoxide, dust, and mercury from coal). The Tucurui dam in Brazil(closed in 1984) had only 0.4 times the impact on global warming than would generating the same power from fossil fuels.

Large lakes formed behind dams have been indicated as contributing to earthquakes, due to changes in loading and/or the height of the water table.

Source: Wikipedia (All text is available under the terms of the GNU Free Documentation License)

For more information (background, pictures, experiments and references): Environmental Impacts of Dams