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Paying the forest for electricity: a modelling framework to market forest conservation as payment for ecosystem services benefiting hydropower generation

Published online by Cambridge University Press:  09 September 2011

MAURICIO E. ARIAS
Affiliation:
University of Canterbury, Department of Civil and Natural Resources Engineering, Christchurch, New Zealand
THOMAS A. COCHRANE*
Affiliation:
University of Canterbury, Department of Civil and Natural Resources Engineering, Christchurch, New Zealand
KEITH S. LAWRENCE
Affiliation:
Conservation International, 1919 M Street, NW Suite 600, Washington, DC 20036, USA
TIMOTHY J. KILLEEN
Affiliation:
Conservation International, 1919 M Street, NW Suite 600, Washington, DC 20036, USA
TRACY A. FARRELL
Affiliation:
Conservation International, 1919 M Street, NW Suite 600, Washington, DC 20036, USA
*
*Correspondence: Thomas A. Cochrane Tel: +64 3 364 2378 Fax: +64 3 364 2758 e-mail: tom.cochrane@canterbury.ac.nz

Summary

The operation and longevity of hydropower dams are often negatively impacted by sedimentation. Forest conservation can reduce soil erosion, and therefore efforts to maintain upstream forest cover within a watershed contribute to the economic life span of a hydropower facility. The cost of forest conservation can be viewed as an investment in hydropower and be financed via a payment for ecosystem services (PES) scheme. A novel modelling framework is used to estimate payments for forest conservation consisting of: (1) land-use change projection; (2) watershed erosion modelling; (3) reservoir sedimentation estimation; (4) power generation loss calculation; and (5) PES scheme design. The framework was applied to a proposed dam in Cambodia (Pursat 1). The estimated net present value of forest conservation was US$ 4.7 million when using average annual climate values over 100 years, or US$ 6.4 million when considering droughts every eight years. This can be remunerated with annual payments of US$ 4.26 ha−1 or US$ 5.78 ha−1, respectively, covering forest protection costs estimated at US$ 0.9 ha−1 yr−1. The application of this type of PES represents a rational option that allows for conservation and development of hydropower watersheds susceptible to erosion and sedimentation.

Type
THEMATIC SECTION: Payments for Ecosystem Services in Conservation: Performance and Prospects
Copyright
Copyright © Foundation for Environmental Conservation 2011

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