Typology of Hydropower Schemes in View of Their External Costs

Investigators
Markus Balmer, Marco Semadeni, Daniel Spreng

Time Frame
2002 - 2004

Funding

PhD-project, supported by the Swiss Federal Institute of Technology ETH Zurich

Abstract
Hydropower is a renewable source of energy. Outside the tropics at least, the environmental impact of its use is small compared to the impact of exploitation of fossil fuel reserves. Without the internalization of external costs, electricity from hydropower is at an unfair disadvantage to electricity from fossil fuel-burning power stations. In the coming harsh climate of liberalized electricity markets, this unfair disadvantage may jeopardize progress towards reducing CO2-emissions as required by the Kyoto agreement. In addition, liberalized electricity markets may further privatization and endanger investments in technologies like hydropower utilization that have long lifetimes.
Although many estimates of external costs related to energy technologies have been made over the last 40 years (EC, 1997; Schleisner, 2000), not much is known about the external cost of hydropower. This lack of knowledge will impede political steps towards the internalization of external costs of energy production and use generally. Little is known on the topic of external cost of hydropower mostly due to the fact that hydropower's environmental impacts are extremely site-specific. Some hydropower schemes have relatively large external benefits while others have relatively large external costs. This diversity has been viewed as a problem, but at the same time, it presents an interesting scientific challenge and a good reason for undertaking this project. The typology to be developed in this project is seen as an attempt to answer this challenge.
Direct approaches for determining external costs derive values for externalities by assessing the valuation of stakeholders, whereas bottom-up approaches address external effects from a natural science-based perspective that tries to quantify effects, determine their significance and only then value, i.e. monetize their impacts. The data employed will come from both approaches. The typology to be developed will not only include 1) the different plant types but also 2) various environmental characteristics, 3) the variety of other land and water resource use, and 4) various arrays of stakeholder perspectives and perceptions. The main source of information will be the content of environmental impact assessment reports, particularly in Switzerland (available from BUWAL) but also from abroad (available for instance from the Commission on Large Dams, Paris). Other sources will be existing case studies on the external cost of hydropower and the literature on monetization of external effects relevant to hydropower utilization.