IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v38y2010i2p726-734.html
   My bibliography  Save this article

Inequalities and externalities of power sector: A case of Broadlands hydropower project in Sri Lanka

Author

Listed:
  • Gunawardena, U.A.D. Prasanthi

Abstract

The objective of the paper is to estimate environmental externalities related to a run of river project in Sri Lanka and to investigate inequity in distribution of impacts among different social groups. Diversion of the river resulted in loss of water sports (for high-income groups both local and remote), loss of historical monuments (for remote high-income groups) and recreation losses (for local poor). Removal of forest cover leads to loss of non-timber products (for local poor) and carbon storage (for remote high- and low-income groups). Loss of home garden productivity was borne by local poor groups. Benefit of the project, generation of 145Â GWh annually, was a gain for the grid connected groups. The impacts were valued using various valuation methods. The base case of the cost benefit analysis resulted in NPV of US$ 11,335,730. When distributional weights are applied for different income groups, both the sign and magnitude of net benefits change. In order to be viable, the project needs diversion of at least 9% of generated electricity to the poorest households in the country. Implications for energy policy towards reducing externality and inequality impacts are also discussed.

Suggested Citation

  • Gunawardena, U.A.D. Prasanthi, 2010. "Inequalities and externalities of power sector: A case of Broadlands hydropower project in Sri Lanka," Energy Policy, Elsevier, vol. 38(2), pages 726-734, February.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:2:p:726-734
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301-4215(09)00744-7
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Venetsanos, Konstantinos & Angelopoulou, Penelope & Tsoutsos, Theocharis, 2002. "Renewable energy sources project appraisal under uncertainty: the case of wind energy exploitation within a changing energy market environment," Energy Policy, Elsevier, vol. 30(4), pages 293-307, March.
    2. Nyborg, Karine, 2000. "Project analysis as input to public debate: Environmental valuation versus physical unit indicators," Ecological Economics, Elsevier, vol. 34(3), pages 393-408, September.
    3. Kaldellis, J. K. & Vlachou, D. S. & Korbakis, G., 2005. "Techno-economic evaluation of small hydro power plants in Greece: a complete sensitivity analysis," Energy Policy, Elsevier, vol. 33(15), pages 1969-1985, October.
    4. Brekke, Kjell Arne, 1997. "The numeraire matters in cost-benefit analysis," Journal of Public Economics, Elsevier, vol. 64(1), pages 117-123, April.
    5. Soderholm, Patrik & Sundqvist, Thomas, 2003. "Pricing environmental externalities in the power sector: ethical limits and implications for social choice," Ecological Economics, Elsevier, vol. 46(3), pages 333-350, October.
    6. Krewitt, Wolfram, 2002. "External costs of energy--do the answers match the questions?: Looking back at 10 years of ExternE," Energy Policy, Elsevier, vol. 30(10), pages 839-848, August.
    7. Torras, Mariano, 1999. "Inequality, Resource Depletion, and Welfare Accounting: Applications to Indonesia and Costa Rica," World Development, Elsevier, vol. 27(7), pages 1191-1202, July.
    8. Edinger, Raphael & Kaul, Sanjay, 2000. "Humankind's detour toward sustainability: past, present, and future of renewable energies and electric power generation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 4(3), pages 295-313, September.
    9. Somanathan, E., 2006. "Valuing lives equally: Distributional weights for welfare analysis," Economics Letters, Elsevier, vol. 90(1), pages 122-125, January.
    10. Ghosh, Debyani & Shukla, P. R. & Garg, Amit & Ramana, P. Venkata, 2002. "Renewable energy technologies for the Indian power sector: mitigation potential and operational strategies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 6(6), pages 481-512, December.
    11. El-Kordy, M.N & Badr, M.A & Abed, K.A & Ibrahim, Said M.A, 2002. "Economical evaluation of electricity generation considering externalities," Renewable Energy, Elsevier, vol. 25(2), pages 317-328.
    12. Bergmann, Ariel & Hanley, Nick & Wright, Robert, 2006. "Valuing the attributes of renewable energy investments," Energy Policy, Elsevier, vol. 34(9), pages 1004-1014, June.
    13. Stirling, Andrew, 1997. "Limits to the value of external costs," Energy Policy, Elsevier, vol. 25(5), pages 517-540, April.
    14. Abbasi, S. A. & Abbasi, Naseema, 2000. "The likely adverse environmental impacts of renewable energy sources," Applied Energy, Elsevier, vol. 65(1-4), pages 121-144, April.
    15. Dincer, Ibrahim, 2000. "Renewable energy and sustainable development: a crucial review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 4(2), pages 157-175, June.
    16. Nick Hanley & Jason Shogren, 2005. "Is Cost–Benefit Analysis Anomaly-Proof?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(1), pages 13-24, September.
    17. Roth, Ian F. & Ambs, Lawrence L., 2004. "Incorporating externalities into a full cost approach to electric power generation life-cycle costing," Energy, Elsevier, vol. 29(12), pages 2125-2144.
    18. Hanley, Nick & Craig, Stephen, 1991. "Wilderness development decisions and the Krutilla-Fisher model: The case of Scotland's 'flow country'," Ecological Economics, Elsevier, vol. 4(2), pages 145-164, November.
    19. Farrow, Scott, 1998. "Environmental equity and sustainability: rejecting the Kaldor-Hicks criteria," Ecological Economics, Elsevier, vol. 27(2), pages 183-188, November.
    20. Shyamsundar, Priya & Kramer, Randall A., 1996. "Tropical Forest Protection: An Empirical Analysis of the Costs Borne by Local People," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 129-144, September.
    21. de Almeida, Aníbal T. & Moura, Pedro S. & Marques, Alféu S. & de Almeida, José L., 2005. "Multi-impact evaluation of new medium and large hydropower plants in Portugal centre region," Renewable and Sustainable Energy Reviews, Elsevier, vol. 9(2), pages 149-167, April.
    22. Kerry Smith, V., 1979. "Uncertainty and allocation decisions involving unique environmental resources," Journal of Environmental Economics and Management, Elsevier, vol. 6(3), pages 175-186, September.
    23. Trussart, Serge & Messier, Danielle & Roquet, Vincent & Aki, Shuichi, 2002. "Hydropower projects: a review of most effective mitigation measures," Energy Policy, Elsevier, vol. 30(14), pages 1251-1259, November.
    24. Batley, S. L. & Colbourne, D. & Fleming, P. D. & Urwin, P., 2001. "Citizen versus consumer: challenges in the UK green power market," Energy Policy, Elsevier, vol. 29(6), pages 479-487, May.
    25. Kim, Sang-Hoon, 2007. "Evaluation of negative environmental impacts of electricity generation: Neoclassical and institutional approaches," Energy Policy, Elsevier, vol. 35(1), pages 413-423, January.
    26. Stewart, Frances, 1978. "Social cost-benefit analysis in practice: Some reflections in the light of case studies using Little-Mirrlees techniques," World Development, Elsevier, vol. 6(2), pages 153-165, February.
    27. Reddy, V. Ratna & Uitto, Juha I. & Frans, Dirk R. & Matin, Nilufar, 2006. "Achieving global environmental benefits through local development of clean energy? The case of small hilly hydel in India," Energy Policy, Elsevier, vol. 34(18), pages 4069-4080, December.
    28. Martinot, Eric, 2001. "Renewable energy investment by the World Bank," Energy Policy, Elsevier, vol. 29(9), pages 689-699, July.
    29. Pehnt, Martin, 2006. "Dynamic life cycle assessment (LCA) of renewable energy technologies," Renewable Energy, Elsevier, vol. 31(1), pages 55-71.
    30. Egre, Dominique & Milewski, Joseph C., 2002. "The diversity of hydropower projects," Energy Policy, Elsevier, vol. 30(14), pages 1225-1230, November.
    31. Gulli, Francesco, 2006. "Social choice, uncertainty about external costs and trade-off between intergenerational environmental impacts: The emblematic case of gas-based energy supply decentralization," Ecological Economics, Elsevier, vol. 57(2), pages 282-305, May.
    32. Bugaje, I.M., 2006. "Renewable energy for sustainable development in Africa: a review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 10(6), pages 603-612, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Jin & Xu, Linyu & Yu, Bing & Li, Xiaojin, 2014. "Environmentally feasible potential for hydropower development regarding environmental constraints," Energy Policy, Elsevier, vol. 73(C), pages 552-562.
    2. Sebestyén, Viktor, 2021. "Renewable and Sustainable Energy Reviews: Environmental impact networks of renewable energy power plants," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).
    3. Lorafe Lozano & Evelyn B. Taboada, 2021. "The Power of Electricity: How Effective Is It in Promoting Sustainable Development in Rural Off-Grid Islands in the Philippines?," Energies, MDPI, vol. 14(9), pages 1-17, May.
    4. Morimoto, Risako, 2013. "Incorporating socio-environmental considerations into project assessment models using multi-criteria analysis: A case study of Sri Lankan hydropower projects," Energy Policy, Elsevier, vol. 59(C), pages 643-653.
    5. Evelyn Gabbay Alves Carvalho & Claudio Jos Cavalcante Blanco & Andr A. A. Montenegro Duarte & Luiz Maur cio Furtado Mau s, 2020. "Decision Support System for Hydro Power Plants in Amazon Considering the Cost of Externalities," International Journal of Energy Economics and Policy, Econjournals, vol. 10(2), pages 40-47.
    6. Anabela Botelho & Lina Lourenço-Gomes & Lígia M. Costa Pinto & Sara Sousa & Marieta Valente, 2018. "Discrete-choice experiments valuing local environmental impacts of renewables: two approaches to a case study in Portugal," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(1), pages 145-162, December.
    7. Botelho, Anabela & Ferreira, Paula & Lima, Fátima & Pinto, Lígia M. Costa & Sousa, Sara, 2017. "Assessment of the environmental impacts associated with hydropower," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 896-904.
    8. Zhang, Jin & Xu, Linyu & Li, Xiaojin, 2015. "Review on the externalities of hydropower: A comparison between large and small hydropower projects in Tibet based on the CO2 equivalent," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 176-185.
    9. Yu, Bing & Xu, Linyu, 2016. "Review of ecological compensation in hydropower development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 729-738.
    10. Singh, Rana Pratap & Nachtnebel, Hans Peter, 2016. "Analytical hierarchy process (AHP) application for reinforcement of hydropower strategy in Nepal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 43-58.
    11. Karin Fernando & Prasanthi Gunawardena, 2015. "Growth within Natural Limits: The Debates, Propositions and Possibilities," Southern Voice Occasional Paper 27, Southern Voice.
    12. Rayamajhee, Veeshan & Joshi, Aakrit, 2018. "Economic trade-offs between hydroelectricity production and environmental externalities: A case for local externality mitigation fund," Renewable Energy, Elsevier, vol. 129(PA), pages 237-244.
    13. Sara Sousa & Anabela Botelho & Lígia M. Costa Pinto & Marieta Valente, 2019. "How Relevant Are Non-Use Values and Perceptions in Economic Valuations? The Case of Hydropower Plants," Energies, MDPI, vol. 12(15), pages 1-18, August.
    14. Hugh Dyer, 2013. "Ethical dimensions of renewable energy," Chapters, in: Hugh Dyer & Maria Julia Trombetta (ed.), International Handbook of Energy Security, chapter 20, pages 443-461, Edward Elgar Publishing.
    15. Rebecca Peters & Jürgen Berlekamp & Ana Lucía & Vittoria Stefani & Klement Tockner & Christiane Zarfl, 2021. "Integrated Impact Assessment for Sustainable Hydropower Planning in the Vjosa Catchment (Greece, Albania)," Sustainability, MDPI, vol. 13(3), pages 1-18, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rayamajhee, Veeshan & Joshi, Aakrit, 2018. "Economic trade-offs between hydroelectricity production and environmental externalities: A case for local externality mitigation fund," Renewable Energy, Elsevier, vol. 129(PA), pages 237-244.
    2. Suberu, Mohammed Yekini & Mustafa, Mohd Wazir & Bashir, Nouruddeen & Muhamad, Nor Asiah & Mokhtar, Ahmad Safawi, 2013. "Power sector renewable energy integration for expanding access to electricity in sub-Saharan Africa," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 630-642.
    3. Evans, Annette & Strezov, Vladimir & Evans, Tim J., 2009. "Assessment of sustainability indicators for renewable energy technologies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(5), pages 1082-1088, June.
    4. Frame, Bob & Cavanagh, Jo, 2009. "Experiences of sustainability assessment: An awkward adolescence," Accounting forum, Elsevier, vol. 33(3), pages 195-208.
    5. Menegaki, Angeliki, 2008. "Valuation for renewable energy: A comparative review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(9), pages 2422-2437, December.
    6. Μichalena, Evanthie & Hills, Jeremy M., 2012. "Renewable energy issues and implementation of European energy policy: The missing generation?," Energy Policy, Elsevier, vol. 45(C), pages 201-216.
    7. Song, Cuihong & Gardner, Kevin H. & Klein, Sharon J.W. & Souza, Simone Pereira & Mo, Weiwei, 2018. "Cradle-to-grave greenhouse gas emissions from dams in the United States of America," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 945-956.
    8. Jenniches, Simon & Worrell, Ernst & Fumagalli, Elena, 2019. "Regional economic and environmental impacts of wind power developments: A case study of a German region," Energy Policy, Elsevier, vol. 132(C), pages 499-514.
    9. Jha, Sunil Kr. & Bilalovic, Jasmin & Jha, Anju & Patel, Nilesh & Zhang, Han, 2017. "Renewable energy: Present research and future scope of Artificial Intelligence," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 297-317.
    10. Longo, Alberto & Markandya, Anil & Petrucci, Marta, 2008. "The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy," Ecological Economics, Elsevier, vol. 67(1), pages 140-152, August.
    11. Zerrahn, Alexander, 2017. "Wind Power and Externalities," Ecological Economics, Elsevier, vol. 141(C), pages 245-260.
    12. Fahlén, E. & Ahlgren, E.O., 2010. "Accounting for external costs in a study of a Swedish district-heating system - An assessment of environmental policies," Energy Policy, Elsevier, vol. 38(9), pages 4909-4920, September.
    13. Baharoon, Dhyia Aidroos & Rahman, Hasimah Abdul & Fadhl, Saeed Obaid, 2016. "Personal and psychological factors affecting the successful development of solar energy use in Yemen power sector: A case study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 516-535.
    14. Kumar Sharma, Ameesh & Thakur, N.S., 2017. "Energy situation, current status and resource potential of run of the river (RoR) large hydro power projects in Jammu and Kashmir: India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 233-251.
    15. Kim, Sang-Hoon, 2007. "Evaluation of negative environmental impacts of electricity generation: Neoclassical and institutional approaches," Energy Policy, Elsevier, vol. 35(1), pages 413-423, January.
    16. Becerra-Lopez, Humberto R. & Golding, Peter, 2007. "Dynamic exergy analysis for capacity expansion of regional power-generation systems: Case study of far West Texas," Energy, Elsevier, vol. 32(11), pages 2167-2186.
    17. del Río, Pablo & Burguillo, Mercedes, 2008. "Assessing the impact of renewable energy deployment on local sustainability: Towards a theoretical framework," Renewable and Sustainable Energy Reviews, Elsevier, vol. 12(5), pages 1325-1344, June.
    18. Gulli, Francesco, 2006. "Social choice, uncertainty about external costs and trade-off between intergenerational environmental impacts: The emblematic case of gas-based energy supply decentralization," Ecological Economics, Elsevier, vol. 57(2), pages 282-305, May.
    19. Sebestyén, Viktor, 2021. "Renewable and Sustainable Energy Reviews: Environmental impact networks of renewable energy power plants," Renewable and Sustainable Energy Reviews, Elsevier, vol. 151(C).
    20. Wagner, Beatrice & Hauer, Christoph & Schoder, Angelika & Habersack, Helmut, 2015. "A review of hydropower in Austria: Past, present and future development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 304-314.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:38:y:2010:i:2:p:726-734. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.