Paying the forest for electricity: A modelling framework to market forest conservation as payment for ecosystem services benefiting hydropower generation
Published in PESC Special issue: Payments for ecosystem services in conservation: performance and prospectsThe 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 US4.7millionwhenusingaverageannualclimatevaluesover100years,orUS 6.4 million when considering droughts every eight
years. This can be remunerated with annual payments
ofUS4.26ha−1orUS 5.78ha-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