Lots of things happen when a country builds a dam. It can cause flooding which can affect the landscape/environment (what sort of plants are there, what sort of farming can be done, what sort of wildlife will remain… also it can cause plants and wildlife to migrate outward from their standard habitat).
A dam also reduces how much water actually flows down the river, or the rate at which that water flows down the river. This means that a country that builds a dam could be hording water at the expense of another country on that same river.
Water is one of the most precious resources on our planet, especially fresh water, and it causes conflict and political tension when one country decides it is going to undertake a massive project like this without including other possibly affected countries.
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