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Connectivity at a cost: The economic dynamics of connectivity restoration
United Nations University - WIDER.
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.ORCID iD: 0000-0001-7206-6568
2014 (English)Conference paper, Oral presentation with published abstract (Refereed)
Abstract [en]

The ecological literature shows that there is a species-area relationship between habitat size and the equilibrium number of species that will thrive in a habitat. There is also a literature on habitat fragmentation showing that, if a larger habitat is broken up into smaller fragments, the long run equilibrium species number will decline in each of the remaining fragments according to the same relationship. Both in the United States and in Europe there is ongoing work on reversing habitat fragmentation in river systems, with fish ladders and other measures being introduced to restore connectivity in river systems that have previously been subdivided into smaller habitats by hydropower and other developments. However, even if connectivity is restored, the new and higher equilibrium species number will be reached only after extended periods of time. This means that measures to restore connectivity entail incurring one-time investment costs (and possibly continuous long run increases in maintenance costs as well) in order to gain habitat improvements that will generate increasing value over time upto the point where the new, better equilibrium is reached. In this paper, we set up a theoretical model to investigate what the conditions are for such an investment to be socially profitable, and link the model to empirical data from measures to restore river system connectivity which show how quickly this recovery tends to occur in practice. We find that even in cases where it would have been socially preferable not to build a hydropower installation in the first place, connectivity-restoring measures affecting the installation are not necessarily socially profitable. Under a wide range of plausible assumptions about discount rates, investment costs and productivity losses, decommissioning the hydropower plant once its economic lifespan is past is a better option, from the social planner’s perspective, than carrying out measures while the plant is still economically viable.

Place, publisher, year, edition, pages
2014.
Keyword [en]
environmental policy, water policy, connectivity, hydropower
National Category
Economics
Identifiers
URN: urn:nbn:se:miun:diva-22523OAI: oai:DiVA.org:miun-22523DiVA: diva2:735366
Conference
9th Annual International Symposium on Economic Theory, Policy and Applications, Athens, Greece, 21-24 July, 2014.
Projects
Water as an economic resource
Available from: 2014-07-25 Created: 2014-07-25 Last updated: 2014-11-19Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf