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Cost-benefit analysis and valuation uncertainty

empirical contributions and methodological developments of a study on trade-offs between hydropower and wild salmon

Håkansson, Cecilia (2007). Cost-benefit analysis and valuation uncertainty. Diss. (sammanfattning/summary) Umeå : Sveriges lantbruksuniv., Acta Universitatis agriculturae Sueciae, 1652-6880 ; 2007:41
ISBN 91-576-7340-4
[Doctoral thesis]

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Abstract

This thesis addresses the economic trade-offs between hydropower and fish production, based on an empirical assessment of the costs and benefits of changing the water flow of the Ume/Vindel River in northern Sweden at a major hydropower plant in ways that would reduce its production of electricity but increase the number of wild salmon in the river. A theoretical framework for dynamic cost benefit analysis (CBA) is presented and applied to the salmon passage-hydropower production conflict. The approach has wider applicability than suggested here, and should be useful in other, similar contexts. To obtain estimates for the benefit of increasing the number of wild salmon the contingent valuation method (CVM) was applied. The CVM is a survey-based method developed for measuring values of non-market goods by using willingness to pay (WTP) questions. A new open-ended valuation question, the “classic and interval open-ended” (CIOE) question, was introduced to accommodate the fact that many people have an inability to state their preferences accurately. Interpretation of the resulting valuation uncertainty is more straightforward with this type of question than with other types of valuation question. There are other advantages as well. In addition, methods are introduced for: finding a WTP point estimate for the CIOE question; estimating lower and upper boundaries for the WTP; and for estimating confidence intervals for the total present benefit. An important element of the empirical analysis is that estimated changes in resource conditions are based on detailed river-specific data. The resource dynamic considerations were introduced into both the scenarios and the WTP questions, using an estimated salmon population model for the Vindel River as a base. A model predicting the effects of varying the water flows on the salmon’s migration behaviour was used to estimate the costs of increasing the number of salmon. A total of 1785 individuals received a questionnaire including the CIOE question; the response rate was 66%. Passive use (non-use) values are the major contributors to the benefit (96-517 MSEK) of increasing the wild salmon stock in the Vindel River. The sensitivity analysis suggests that the opportunity costs in terms of lost electricity are typically higher than the estimated benefits.

Authors/Creators:Håkansson, Cecilia
Title:Cost-benefit analysis and valuation uncertainty
Subtitle:empirical contributions and methodological developments of a study on trade-offs between hydropower and wild salmon
Series/Journal:Acta Universitatis agriculturae Sueciae (1652-6880)
Year of publishing :2007
Volume:2007:41
Number of Pages:31
Papers/manuscripts:
NumberReferences
ALLHåkansson, C., Johansson, P-O. & Kriström, B. 2005. Salmon and hydropower: Dynamic cost-benefit analysis, in The theory and practice of environmental and resource economics- Essays in honour of Karl-Gustaf Löfgren, Eds. Aronsson, T., Axelsson, R. & Brännlund, R., Edwar Elgar, UK. Håkansson, C. 2006. A new valuation question – Analysis of and insights from interval open-ended data in contingent valuation. Forthcoming in Environmental and Resource Economics. Håkansson, C. Costs and benefits of improving wild salmon passage in a regulated river (Submitted).
Place of Publication:Umeå
Publisher:Department of Forest Economics, Swedish University of Agricultural Sciences
ISBN for printed version:91-576-7340-4
ISSN:1652-6880
Language:English
Publication Type:Doctoral thesis
Full Text Status:Public
Agrovoc terms:water power, atlantic salmon, cost benefit analysis, valuation, rivers, sweden
Keywords:classic and interval open-ended (CIOE) question, contingent valuation (CV), dynamic cost-benefit analysis (CBA), hydropower, salmon, valuation uncertainty, willingness to pay (WTP)
URN:NBN:urn:nbn:se:slu:epsilon-1571
Permanent URL:
http://urn.kb.se/resolve?urn=urn:nbn:se:slu:epsilon-1571
ID Code:1432
Faculty:S - Faculty of Forest Sciences
Department:(S) > Dept. of Forest Economics
Deposited By: Cecilia Håkansson
Deposited On:30 Apr 2007 00:00
Metadata Last Modified:11 Jun 2015 08:29

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