Modern Cost–Benefit Analysis of Hydropower Conflicts

Modern Cost–Benefit Analysis of Hydropower Conflicts

Edited by Per-Olov Johansson and Bengt Kriström

This important book sheds light on the ways in which modern tools of welfare economics can be used to assess the benefits and costs of resource conflicts involving hydropower. The chapters highlight key methodological issues in this area; ranging from the intersection between cost–benefit analysis and behavioral economics, to the value of load balancing services provided by hydropower. The inclusion of insights from expert contributors from both sides of the Atlantic brings a unique and interesting range of viewpoints to the work.

Chapter 8: The Political Economy of Hydropower and Fish in the Western US

John W. Duffield

Subjects: economics and finance, environmental economics, environment, environmental economics, water


John W. Duffield1 INTRODUCTION 1 This chapter provides an economic perspective on the conflict between hydropower development in the Western United States and the preservation of natural river ecosystems. The main objective of the chapter is to examine the application of cost–benefit analysis, and particularly nonmarket valuation, in decisions where the trade-off of hydroelectric production and the services of free-flowing rivers, including fisheries, are key. The approach is to review a set of selected case studies of hydroelectric power and fishery initiatives over the last 40 years. A major part of this story are significant changes to the legal context in which these decisions have been made, and which, particularly by the mid-1980s, dramatically changed the decision process. Basic questions the chapter aims to answer are: why did some dams get built, and not others; why are some dams being removed and what role does economics play in these decisions? While the benefits of hydropower are principally the provision of a marketed commodity at a cost lower than the next best alternative source of power, the values provided by natural environments, aside from some natural resource industries like commercial fishing, are often not priced and must be evaluated through other means. These values include both direct on-site use, such as sportfishing, boating and wildlife observation, but also what has come to be called passive use, which includes the value associated with the existence of natural environments and related biota and the desire to bequest these resources to future generations,...

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