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Environmental Constraints on Hydropower: An Ex Post Benefit-Cost Analysis of Dam Relicensing in Michigan


Author Info

  • Matthew J. Kotchen
  • Michael R. Moore
  • Frank Lupi
  • Edward S. Rutherford


We conduct a benefit-cost analysis of a relicensing agreement for two hydroelectric dams in Michigan. The agreement changed daily conditions from peaking to run-of-river flows. We consider three categories of costs and benefits: producer costs of adapting electricity production to the new time profile of hydroelectric output; benefits of reductions in air pollution and greenhouse gas emissions; and benefits of improved recreational fishing. The best estimates suggest that the aggregate benefits are more than twice as large as the producer costs. The conceptual and empirical methods provide a template for investigating the effects of an environmental constraint on hydroelectric dams.

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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 82 (2006)
Issue (Month): 3 ()
Pages: 384-403

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Handle: RePEc:uwp:landec:v:82:y:2006:i:3:p:384-403

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  1. repec:zwi:journl:y:2009 is not listed on IDEAS
  2. Guisández, Ignacio & Pérez-Díaz, Juan I. & Wilhelmi, José R., 2013. "Assessment of the economic impact of environmental constraints on annual hydropower plant operation," Energy Policy, Elsevier, vol. 61(C), pages 1332-1343.
  3. Shilei Niu & Margaret Insley, 2010. "On the Economics of Ramping Rate Restrictions at Hydro Power Plants: Balancing Profitability and Environmental Costs," Working Papers 1017, University of Waterloo, Department of Economics, revised Dec 2010.
  4. Pérez-Díaz, Juan I. & Wilhelmi, José R., 2010. "Assessment of the economic impact of environmental constraints on short-term hydropower plant operation," Energy Policy, Elsevier, vol. 38(12), pages 7960-7970, December.
  5. Knoche, Scott & Lupi, Frank, 2007. "Valuing deer hunting ecosystem services from farm landscapes," Ecological Economics, Elsevier, vol. 64(2), pages 313-320, December.
  6. Chen, Min & Lupi, Frank, 2013. "Modeling Long Overnight Trips by Chaining Recreation Sites," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150489, Agricultural and Applied Economics Association.
  7. Sheila M. Olmstead, 2010. "The Economics of Managing Scarce Water Resources," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 179-198, Summer.
  8. Matthew J. Kotchen & Laura E. Grant, 2011. "Does Daylight Saving Time Save Energy? Evidence from a Natural Experiment in Indiana," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1172-1185, November.
  9. Lee, Yoon & Yoon, Taeyeon & Shah, Farhed A., 2009. "Economics of Integrated Watershed and Reservoir Management," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49478, Agricultural and Applied Economics Association.


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