Before this confluence the river passes through a second major hydroelectric project, the Yacyretá Dam, a joint project between Paraguay and Argentina. It is the second largest dam in the world. The massive reservoir formed by the project has been the source of a number of problems for people living along the river, most notably the poorer merchants and residents in the low-lying areas of Encarnación, a major city on the southern border of Paraguay. River levels rose dramatically upon completion of the dam, flooding out large sections of the city's lower areas.