|
The study develops a framework to analyse a unique natural,
environmental or cultural asset that is threatened by a
proposal infrastructure development project. The framework
consists of the theoretical basis and, a methodology to
estimate a decision bound of the “economic value of
the asset” and to describe the uncertainty associated
with that valuation. To develop the methodology and to analyse
impacts on policy objectives of electrical power generation,
the decision bound of the “economic value of waterfalls”,
the threatened natural assets due to the proposed Upper
Kotmale Hydropower Project (UKHP), and a quantification
of the risk of that estimation are utilised as the case
study.
The basic concepts of economic value and
the extended benefit cost rule for accepting a project are
derived as theoretical bases. The economic value of an environmental
resource/ asset is described in terms of its total economic
value, and it is demonstrated how the concept of total economic
value relates to the waterfalls threatened by UKHP. The
contingent valuation method, its use as the only valuation
technique to value unique natural environmental or cultural
assets, and the theoretical and practical difficulties of
contingent valuation in real life applications are highlighted.
The cost and benefits of the main non-waterfall
environmental impacts are valued using valuation techniques
based on the principles of environmental economics. Using
the extended benefit cost rule for accepting a project and
reverse analyses of valued environmental impacts, decision
bound on the “economic value of waterfalls”
is estimated from without project and with project scenarios.
The decision bound on the “economic value of waterfalls”
threatened by UKHP facilitates prudent decision-making.
There is considerable risk and uncertainty
associated with this decision as it is based on a proxy
value for the actual economic value society places on these
waterfalls. A methodology to describe the uncertainty associated
with that decision is developed using the principles of
risk analysis. The objective of uncertainty analysis is
defined with a description of the proxy risk simulations
that were carried out to describe the associated uncertainty.
The interpretation of the results from the risk simulation
and their use to estimate the level of confidence in the
decision is described.
The impacts on the current policy objectives
for electrical power generation when faced with a unique
natural, environmental or cultural asset that is threatened
by a proposed infrastructure project are analysed and discussed.
Table of Contents
- Introduction
- Economic Value of the Environment
- Economic Valuation of Environmental Impacts
- Extended Benefit Cost Analysis
- Risk and Uncertainty Analysis
- Impacts on Policy Objectives
- Conclusions
- References
|
