Author(s)

R. Morimoto

Abstract

This paper empirically applies cost benefit analysis to much debated hydropower projects in Malaysia, Nepal and Turkey. The study selects an interesting mixture of cases, as main characteristics of each dam, geographical locations of each dam, and the development stage of each country differ. The study brings together all the major issues attached to each hydropower project and estimates the quantitative impacts of these controversial dams. The cost benefit analysis model in this study takes into account of premature decommissioning of dams and the correlation between the parameters of generation capacity, total construction cost and construction period. The mean cumulative net present value at the 100th year of the analysis with the 5% discount rate for Sharada-Babai dam in Nepal shows a positive figure, whereas the mean cumulative net present value after 100 years for both Bakun dam in Malaysia and Ilisu dam in Turkey are negative. The mean value of the cumulative net present value for Sharada-Babai becomes negative when the pure rate of time preference is larger than 6%; for Bakun and Ilisu, converge to zero as pure rate of time preference becomes larger. The sensitivity analysis shows the dominant positive impact of the generation capacity parameter on net present value for Bakun; and the parameter expressing initial expected increase in economic output for Sharada-Babai and Ilisu. Keywords: Bakun, cost benefit analysis, hydro power development, Ilisu, net present value, sensitivity analysis, Sharada-Babai. 1 Introduction The serious negative effects of large dams have been widely discussed, and the roles of large dams have been questioned, over the past two decades (WCD [1]). However, there are still numerous plans to build massive dams worldwide,

Keywords

Bakun, cost benefit analysis, hydro power development, Ilisu, net present value, sensitivity analysis, Sharada-Babai.