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Identifying the Direct and Indirect Economic Effects of Electric Power Development Projects

In: Regional Science: Perspectives for the Future

Author

Listed:
  • Toshiyuki Hayashi
  • Sid Saltzman

Abstract

One of the primary methods for evaluating the economic effects of development projects in general, and electric power plants in particular, is cost-benefit analysis (CBA). This method typically compares the direct cost and benefit streams throughout a project’s life (that is, its economic effects) which, in the case of electric power plants, includes both its construction and its operation phases. Typically, the direct economic costs of a project are evaluated using the notion of opportunity costs which, conceptually, reflect the economic scarcity of the resources that will be used by the project. For electric power projects, the direct economic benefits can be ascertained by estimating the economic price of electricity which, conceptually, also reflects its economic scarcity. Economic scarcity is reflected in the concept of consumers’ surplus, which can be determined by estimating consumers’ willingness to pay for electricity.1

Suggested Citation

  • Toshiyuki Hayashi & Sid Saltzman, 1997. "Identifying the Direct and Indirect Economic Effects of Electric Power Development Projects," Palgrave Macmillan Books, in: Manas Chatterji (ed.), Regional Science: Perspectives for the Future, chapter 22, pages 314-325, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-25514-6_22
    DOI: 10.1007/978-1-349-25514-6_22
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