Decision Support System for Hydro Power Plants in Amazon Considering the Cost of Externalities

Evelyn Gabbay Alves Carvalho, Claudio Jos Cavalcante Blanco, Andr A. A. Montenegro Duarte and Luiz Maur cio Furtado Mau S
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Evelyn Gabbay Alves Carvalho: PhD Student of Graduate Program in Engineering of Natural Resources of the Amazon, Federal University of Par , PRODERNA/ITEC/UFPA, Brazil,
Claudio Jos Cavalcante Blanco: School of Environmental and Sanitary Engineering, Federal University of Par , FAESA/ITEC/UFPA, Brazil,
Andr A. A. Montenegro Duarte: School of Environmental and Sanitary Engineering, Federal University of Par , FAESA/ITEC/UFPA, Brazil,
Luiz Maur cio Furtado Mau S: School of Civil Engineering, Federal University of Par , FEC/ITEC/UFPA, Brazil.

International Journal of Energy Economics and Policy, 2020, vol. 10, issue 2, 40-47

Abstract: Feasibility studies on Hydro Power Plants (HPPs) should adequately measure the values of the social, economic and environmental impacts (i.e., its externalities) of HPPs. In this case, the final cost of an energy generation project is lower than the actual value because the impacts are not appropriately assessed. Thus, the objective of this paper is to estimate the total cost of generated energy using a methodology capable of accounting for the cost of the externalities of hydroelectric plants. This study assesses the externality resulting from loss of fishing activity, an economic activity practised by a large part of a population affected by hydroelectric dam construction. To assess this externality, the opportunity cost method and a time series analysis are used to forecast future values. It is demonstrated that when considering only the externality resulting from the loss of fishing activity, the expected cost of energy production could increase significantly. This result indicates the need to calculate all the externalities caused by the implementation of a hydroelectric power plant (HPP) and to incorporate these actual values into the energy production cost, so the enterprise is sustainable and feasible. Our results also facilitate a realistic comparison with other sources of energy generation.

Keywords: fishing activity; opportunity cost; forecast; Amazon. (search for similar items in EconPapers)
JEL-codes: Q2 Q4 (search for similar items in EconPapers)
Date: 2020
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