Phase-based externality analysis for large hydropower projects

Abstract

The global pressure of reducing greenhouse gas emission with an increasing energy demand has promoted the development of hydropower projects. However, these projects are always involved with controversial issues even when providing great positive externalities. This calls for more comprehensively quantitative analysis of hydropower project externalities. This paper establishes an analysis framework for hydropower project externalities based on the Life Cycle Assessment methodology and the economic valuation of hydropower externalities, and then applies the framework to the assessment of the Three Gorges Project and the Xiluodu Project as cases. The results indicate that: (1) hydropower project externalities are multi-component and dynamic in different phases of project life cycle; (2) the construction of large hydropower projects is beneficial for social welfare promotion, but the enhancement doesn't appear immediately at the startup but with a lag; and (3) along the life cycle of a hydropower project, negative externalities are prominent in the early phases while positive ones account for a major proportion in the late phases, calling for special attention to risk management during the construction and benefit allocation management during project operation. The results and recommendations of this paper can also be applied to other types of public or private projects for better social performance.