Incorporating ecosystem services value into the optimal development of hydropower projects

Abstract

Using an efficient cost-benefit analysis framework and optimization model is essential for the proper planning of hydropower projects. The implementation of hydropower has different effects on the environment, which undermine the delivery of ecosystem services. The change in ecosystem services is often not included in hydropower projects' economic analysis and planning. Understanding the quantity of ecosystem services and their associated economic value is an important step to protection of ecosystems and provides an opportunity to enter ecosystem services into economic relations. Thus, the main purpose of this study is to investigate how to incorporate ecosystem services into project optimization models and decision-making. So, an attempt is made to quantify these environmental effects to develop a comprehensive simulation-optimization model and achieve a more sustainable development of hydropower projects in the system. The costs and benefits from the environmental economy include hydropower advantages and loss of ecosystem services added to the objective function. The results show that considering the environmental affects the NPV and decision variables such as the normal water level and installed capacity. The economic value of negative environmental impacts was more than its advantages and caused about 27% and 14.5% decrease in NPV and energy generation of the HPP project.