AN ECONOMIC EVALUATION OF TWO WATERSHED MANAGEMENT PRACTICES IN TAIWAN1

Abstract

ABSTRACT: The main purpose of this study is to evaluate the management practice effects on Ming‐Hu and Ming‐Tan reservoir watersheds during the past 15 years. It is difficult to economically evaluate a watershed project consisting of a number of multisectoral and long term management practices and regulations. However, the reservoirs’ hydropower operations and their associated benefits and costs are highlighted in this study. The estimated management practice value (net present value) of 351 million NT (New Taiwan) dollars and a benefit‐cost ratio of 1.189 are obtained for the Ming‐Hu subwatershed. Because the Ming‐Tan hydropower station only began commercial operation in 1992 the estimated management practice value is negative 103 million NT dollars (net present value) and the benefit‐cost ratio is 0.653 in the Ming‐Tan subwatershed. If the analysis period is contained to the year 2010, the benefit‐cost ratio of Ming‐Tan reservoir subwatershed becomes 1.103. Ming‐Hu and Ming‐Tan subwatersheds together share the benefit‐cost ratio of 1.182 and the net present value of 1,589 million NT dollars. The results of the analyses indicate that the Taiwan Power Company, the watershed management agency, has implemented economically efficient watershed practices and regulations in Ming‐Hu and Ming‐Tan reservoir watersheds and the watershed management practices are worthwhile and should be sustained.