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Economics and Social Costs of Hydroelectric Power


  • Johansson, Per-Olov

    () (Stockholm School of Economics)

  • Kriström, Bengt

    () (Department of Economics, SLU)


This paper offers a non-technical overview of the issues involved when applying cost-benefit analysis (CBA) to hydropower, both in terms of new installations and changing existing regulatory structures. Our focus is on the conceptual and empirical problems of applying CBA to provide decision support in such cases. A large body of literature now exists on the social net values of generating electricity from moving water. The studies focusing values related to the ecological system include, but are not limited to, effects on climate, aesthetics, landscape, recreation and wildlife. Taken together, they confirm the view that the public invariably seems to place significant values on the integrity of the ecological system. It does, however, not seem possible to draw general conclusions from the literature on whether or not a given (dis)investment will pass a cost-benefit test; the end-result depends entirely on the specifics.

Suggested Citation

  • Johansson, Per-Olov & Kriström, Bengt, 2018. "Economics and Social Costs of Hydroelectric Power," CERE Working Papers 2018:9, CERE - the Center for Environmental and Resource Economics.
  • Handle: RePEc:hhs:slucer:2018_009

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    Cost-Benefit Analysis; Ecosystem Services; Energy; Sustainable Energy System; Hydropower;

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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