Environmental Protection and Compensation Costs for the Yali Hydropower Plant in Vietnam

The Yali Hydropower Plant (YHPP) is located on the Sesan River in the West Highlands of Vietnam's Central region. It has an installed capacity of 720 MW and an energy output of 3,600 GWh per annum. Construction of the plant began in 1993 and was completed in 2000. Inundation of the reservoir led to the flooding of 1,933 ha agriculture-based land and the relocation of 1,149 households living in 26 villages. In published environmental and financial studies of YHPP, the original financial analysis ignored a wide range of environmental costs in determining the most important indices of financial viability namely, its net present value and electricity price. As a result, the full cost of hydropower generation scheme is understated. Thus the calculated price charged for electricity generated by the plant did not cover the full cost of electricity production, and the estimated net present value of the plant did not reflect its real value. The purpose of this study is to estimate the monetary value of the main environmental protection and compensation costs of YHPP and to incorporate them into the financial viability indices of the plant, namely its net present value and electricity price.