Cost-Benefit Analysis of River Regulation: The case of Emån and Ljusnan (2008-)

Cooperation Partners: Resource Economics, Department of Forest Economics, SLU; Department of Wildlife, Fish, and Environmental Studies, SLU.

This research program presents an integrated natural-social science approach to Cost-Benefit
Analysis (CBA) of river regulation, with a primary focus on the Emån and Ljusnan watersheds.
Each watershed requires a slightly different analytical focus: water flow considerations in the
Ljusnan and fish passage in the Emån. This research program divides these two foci into six
analytic scenarios. For each scenario (except the two benchmark scenarios), we
examine the ecological consequences of alternative environmental measures, develop values (e.g.,
costs and benefits) of these measures, characterize various measurement uncertainties, and, finally, subject the data to state-of-the-art welfare analysis. Thus, the interdisciplinary research program requires input from three groups of scientists: natural scientists, mathematical statisticians and resource economists.

The project assumes we start with an impacted watershed (e.g., the Emån or Ljusnan). The
development of the scenarios is done in close cooperation with local stakeholders. The
implementation of these measures will lead to (1) development costs estimated by our team of
economists and (2) ecological consequences assessed by our natural scientists. These
consequences provide environmental improvements, some of which can be quantified in terms of
economic values. Ultimately, the welfare analysis will compare this development of costs and
benefits. The uncertainty inherent in estimating future costs, benefits, and environmental
improvements will be considered at each step by our mathematical statisticians. This uncertainty
will also be developed in our extensions of current welfare theory. By identifying the project
aspects that are most affected by uncertainty, the issues can be handled appropriately and results
can be more comprehensively presented to policy-makers.

The program is based on two ideas. First, we develop new  and refine existing  methods of
environmental measurement and economic valuation. Second, we aim to develop generalizable
insights from our methods which can be applied in similar settings. For example, the results of this
analysis will inform future study and decision-making under the EU Water Framework Directive

The structure of this interdisciplinary program is based on four work packages (WP), supported by
a management team and various measures to ensure our research is carried out in close cooperation across the different disciplines. The four WPs include:
" Work Package #1: Cost-Benefit Analysis
" Work Package #2: Uncertainty
" Work Package #3: Re-establishing fish connectivity through fish passage (Emån
" Work Package #4: Ecosystem restoration in flow-regulated rivers