Economics and Social Costs of Hydroelectric Power

20 Pages Posted: 6 Nov 2018

See all articles by Per-Olov Johansson

Per-Olov Johansson

Stockholm School of Economics

Bengt Kriström

SLU- Centre for Environmental and Resource Economics (CERE)

Date Written: October 15, 2018


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.

Keywords: Cost-Bene t Analysis, Ecosystem Services, Energy, Hydropower, Sustainable Energy System

JEL Classification: H43, Q41, Q42, Q51

Suggested Citation

Johansson, Per-Olov and Kriström, Bengt, Economics and Social Costs of Hydroelectric Power (October 15, 2018). CERE Working Paper, 2018:9, Available at SSRN: or

Per-Olov Johansson (Contact Author)

Stockholm School of Economics ( email )

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Bengt Kriström

SLU- Centre for Environmental and Resource Economics (CERE) ( email )

Umea, 901 83
+46-(0)90-7865219 (Phone)

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