I. Introduction Southeast Asia has experienced a massive increase in electricity consumption over the last decade. This trend looks set to continue as industry develops and the region's population rises. Although renewable sources of energy production such as wind and solar can play in meeting energy demand, large-scale fossil-fuel-fired power stations will provide the bulk of the region's power needs for the foreseeable future. Such power stations can have massive environmental and social impacts. The need for cost-effective pollution control technologies and approaches for such plants is therefore vital. Thailand's Mae Moh power plant, with its 2,625 megawatt (MW) installation capacity, is the largest thermal lignite-fired (1) power plant in Southeast Asia, meeting approximately 18 per cent of the national power demand. There have been substantial environmental and social concerns regarding the operation of the plant, especially after the first incidence of air pollution caused by it in 1992. At that time, the plant reached its capacity of 2,025 MW--and apparently hit the ecological carrying limit of the surrounding environment. An all-time high reading of the hourly average ground level of ambient sulfur dioxide (S[O.sub.2)] concentration of 3,418 micrograms per cubic metre ([micro]g/[m.sup.3]) was observed as compared with the then hourly average Thai standard of 1,300 [micro]g/[m.sup.3]. This S[O.sub.2] level caused people in several villages near the power plant to suffer from coughs, asthmatic attacks, chest tightness and wheezing. Many of them were hospitalized. In addition to the health impacts, damage to crops, trees and livestock was also reported. Damage to rice, field crops and vegetables was obvious; the leaves of many trees withered and dropped overnight. Negative reactions from the public accelerated the decision to retrofit Flue Gas Desulfurization systems (FGDs) to the eight remaining power generation units (units 4 to 11), starting in 1994. This has resulted in substantially improved ambient air quality since the year 2000. However, the decision to install these emission control systems was undertaken without a cost-benefit analysis, i.e., the authorities had no basis to know whether the value of the damages avoided by reducing emissions would be sufficient to justify the cost of installing and operating the controls. This paper provides such an analysis, ex post. II. Background II.1 Study Site The Mae Moh power plant is located in the Mac Moh valley of Lampang province in northern Thailand, roughly 600 kilometres north of Bangkok. Lampang has an area of about 12,500 square kilomctres, of which 70 per cent is forested. Mining contributes about 17 per cent of Lampang's GDR Agriculture contributes about 8 per cent but accounts for 52 per cent of the total labour force. Half of the total farmland is devoted to paddy rice, while 23 per cent and 17 per cent area are under fruit trees and field crops, respectively. The Mae Moh District covers 855 square kilometres, of which about 70 per cent are mountainous. Most of it is situated within the national forest reserves. II.2 The Mae Moh Power Plant and Flue Gas Desulfurization Technology Owned and operated by the Electricity Generating Authority of Thailand (EGAT), the first generation unit of the Mae Moh power plant was first operated in 1978 and gradually expanded until it reached the capacity of 2,025 MW with eleven operating units in 1992, when the aforementioned S[O.sub.2] incident occurred. Shortly after the incident, EGAT installed high investment, wet scrubbing FGD systems to reduce S[O.sub.2] emissions to permissible levels. The Mae Moh power plant's expansion to units 12 and 13 had to be equipped with FGD systems at the time of construction in 1993. EGAT's plan to set up a new Lampang power plant with an additional installed capacity of 2,400 MW was aborted due to the limited carrying capacity of the environment and the negative impacts on human health and the environment. …