From Envirowiki

A Dam is a blockage in a waterway designed to hold water, usually for use later, but sometimes also for flood control or other uses. Humans build dams for irrigation, drinking water storage, and hydroelectricity. Beavers also build dams, although they actually live in the dams.

Dams can be a great way to store water, especially in dry gullies on hillsides. In such small scale cases, they can be beneficial to the surrounding area by providing habitat, drinking water for fauna, as well as by stabilising the water table, and making areas more drought resistant.

Large dams can have almost the the opposite effect, wiping out large areas of ecosystem (see Franklin dam), displacing human populations (See Three Gorges dam, Naramada dams), restricting nutrient flow, and, through irrigation, increasing the instance of waterbourne disease (see Aswan dam).