The giant Three Gorges Dam was supposed to be China's crowning engineering achievement. Instead, the project has been plagued by flooding, pollution and landslides.

The Chinese Government has admitted that environmental damage could force another four million people from their homes over the next 10 to 15 years.

Now environmentalists are warning of a potential catastrophe at another controversial dam proposal at the spectacular Tiger Leaping Gorge in southern Yunnan Province. China correspondent Charlotte Glennie reports.

Charlotte Glennie: China's vast Tiger Leaping Gorge is testament to the power of nature. Torrents rage at the foot of a ravine more than 3,000 metres deep, so named because according to local legend, a tiger once leapt across it. Many see the gorge as a natural wonder worth preserving, but to others, these turbulent waters are an enormous, untapped resource.

Nie Tian Yu, Lijiang Tourism Administration (translated): Besides Lijiang's tourism resources as the major economic contributor, developing Lijiang's water resources will be the new economic growth point.

Charlotte Glennie: China is short of electricity. In the southern province of Yunnan, it has the abundant capacity for hydropower that the nation needs. Yunnan already provides more than a quarter of China's total electricity output. Dozens of dams have been built and many more under construction. Homes and villages soon to be flooded are marked for demolition. But the plan for a dam at the Jinsha River's Tiger Leaping Gorge is extremely controversial.

This magnificent landscape, thought to be the real location for the fictional Shangri-La, would be submerged after the construction of the dam. But the economic arguments are strong. It's said the sheer force of the water in the Gorge would generate more electricity per cubic metre of water than any other Chinese hydropower plant.

”This is China's gorge but also it's the world's gorge.” Xun Sha

Xun Sha, Tiger Leaping Gorge resident: Be very careful about this beautiful place. This is China's gorge but also it's the world's gorge.

Charlotte Glennie: Xun Sha has lived in the Tiger Leaping Gorge all his life. Twenty years ago, he opened its first guesthouse, which now attracts many tourists. He is bitterly opposed to a dam, and says many others are too, but they won't speak out because they fear the repercussions.

Xun Sha: I'm also afraid that, but you know, if you don't say anything, who'll protect the gorge?

Charlotte Glennie: Environmentalists say secret construction of a dam here began in 2004, without authorities first obtaining reports from experts on the likely impact on the environment. Yunnan's provincial government is believed to have favoured damming the gorge, but the central government is said to have expressed reservations. Nine Chinese NGOs (non-government organisation) led a campaign to stop it.

Environmentalist: If you build the dam, the first thing you [need] is public participation. You need public opinion, to decide if it is built or not. We need an environmental impact assessment, so after this we say yes or not.

Charlotte Glennie: For now, anti-dam lobbyists appear to have won a reprieve. But they're met with fierce and powerful resistance, and many tell us they're now afraid to openly voice their opposition. This environmentalist is one of the few who would be interviewed on camera. But she asked us not to use her name.

Environmentalist: For the China NGOs, we want to keep the nature. We hope the nature not only for today [but for the] future. We need it [for] GDP, but we also need a sustainable developing economy.

Charlotte Glennie: It's understood the proposed dam would be a joint project between the Yunnan provincial government and a subsidiary of the state-owned enterprise, Huaneng Group. They and Beijing authorities refused our requests for interviews. No plans have been made public to dam the Tiger Leaping Gorge, but it appears preparatory work is being done. Deep in the gorge we found numerous recently dated rock samples. They're accompanied by labels from the state electricity corporation's exploratory institute.

Every morning Zhao Lian Ying wakes up in one of the world's most spectacular locations. If the dam is built, she'll have to move. But she is more concerned about her livelihood than the view.

Zhao Lian Ying, Tiger Leaping Gorge resident (translated): I am a farmer, so I don't care if the scenery is beautiful. I need work. If I have work, I have a good life.

Charlotte Glennie: Villagers like Zhao Lian Ying know a dam might be built, but other than that, they've been given no information. They've been living in limbo for the last three years.

Charlotte Glennie: Australian Margo Carter runs a cafe for backpackers at the entrance to the Gorge. If the dam project goes ahead her whole town will also be flooded.

”I just feel powerless, frustrated and gasp at the sheer folly of it, the lack of appreciation of such a beautiful place.” Margo Carter

Margo Carter, Qiaotao town resident: I just feel powerless, frustrated and gasp at the sheer folly of it, the lack of appreciation of such a beautiful place. When so many Chinese travellers come here each year and enjoy it. Why not keep it?

Charlotte Glennie: But recently the gorge has been often closed to tourists due to landslides. Authorities say they're the result of bad weather, but locals also blame recent construction. A new road has been built here and residents say there's been a lot of other activity that they suspect is laying the groundwork for the dam.

Margo Carter: Now it's been dynamited for the road and now the geological testing is going on, that makes the ricocheting of the dynamite more frequent through the Gorge when the rock has already been weakened by the widening and undercutting, so that landslides are more likely and have occurred more often. And fatalities therefore occur more often, and people who suffer most are the locals, because they're using this road most often.

Charlotte Glennie: Towns will be affected far beyond the gorge. Some kilometres upstream, there occurs a rare natural phenomenon. At the first great bend of the Yangtze River, which in its upper reaches is the Jinsha River, the water dramatically reverses direction. High on the cliff above is a small plaque marking the point the water will reach up if the Jinsha River Tiger Leaping Gorge is dammed.

”Environmentalists estimate that up to 100,000 local residents will have to be relocated.”

If the controversial Jinsha dam river project goes ahead, many lively villages like this one will all be submerged. Environmentalists estimate that up to 100,000 local residents will have to be relocated. They also say that some of the best-preserved plant and animal life in China will be destroyed, and that the unique cultural heritage of this region will be lost forever.

In the old town of Shigu, local resident Li Jia Zhen shows me the ancient stone drum, which the town is named after. It commemorates the epic 16th century defeat of Tibetan invaders. In the 1930s, 18,000 of Mao's famous long marchers crossed the river here over four days and nights, pursued by the Nationalist Army.

Mr Li says it would be devastating if all that history was drowned. He is also worried about how he'd provide for his family if he had to move.

Li Jia Zhen, Shigu town resident (translated): There's an old saying in Chinese, which says, "It's hard for people to leave their hometown". To move to a new place, we need to start a new life. At my age it's hard to adapt to new surroundings.

Charlotte Glennie: This is a region of many unique ethnic minorities. Mr Li is a member of Shigu's traditional Naxi orchestra. The musicians are united in their opposition to the dam.

He Hie Ying, Naxi Musician (translated): We are unwilling to move out because this place has green mountains and beautiful water. Such a beautiful place. We can't find another place as good as here, so we don't want to move.

Charlotte Glennie: However, the dam's opponents are faced with a tough dilemma. They don't want to be seen as making trouble by opposing the government. But so far they've been told so little about the dam proposal that they don't even know who wants to build it.

”We local people have no way to oppose it.” Li Jia Zhen

Li Jia Zhen (translated): We local people have no way to oppose it. If the government uses mighty power, that kind of power ordinary people probably won't have any choice.

Charlotte Glennie: Downstream, Margo Carter laments the lack of information.

Margo Carter: It's clearly deliberate and I think people can't plan their lives without good information. If only people knew, had a timetable, some idea, they could plan their lives. It's just so unkind to the local people and so disrespectful to keep them in the dark.

Charlotte Glennie: It's often said that man is powerless in the face of nature. But here, people may have proved powerless against others determined to control nature.

Edmund Roy: Charlotte Glennie with that report.