Contingent Valuation of the Proposed Hólmsárvirkjun at Atley Hydropower Project: Estimating a Preservation Value for the Area

• Main Author: Clinton Allen Cook 1976-
• Other Authors: Háskóli Íslands
• Format: Master Thesis
• Language: English
• Published: 2023
• Subjects: Umhverfis- og auðlindafræði; Umhverfisfræði; Auðlindafræði; Iceland
• Online Access: http://hdl.handle.net/1946/44550

Iceland’s policy objective for carbon neutrality by 2040 will require construction of new power plants, given the current energy mix. However, monetary value of the social and environmental impacts associated with those developments are not currently incorporated into the decision-making process. This study measured the economic preservation value for the Hólmsá and Tungufljót river basins in southern Iceland, in consideration of the 65-megawatt Hólmsárvirkjun at Atley hydropower project. The Total Economic Value (TEV) framework was selected, and contingent valuation method was employed through a web-based survey to capture potential changes to use, and non-use values associated with the study area. The Social Science Research Institute at the University of Iceland was contracted to implement a national survey of Icelandic residents using a stratified random sample of 2,909 adults from their panel database. Response rate was 46.6%, with 35.1% of respondents indicating a willingness to pay (WTP) to protect the area from hydropower development. After excluding protest voters and accounting for those with and without WTP, estimated mean WTP equaled 5,515 ISK. When scaled to the population of Icelandic residents, aged 18 and older, that equates to a negative change in TEV between 1.52 and 1.7 billion ISK. Compared to the estimated levelized cost of energy for the Hólmsárvirkjun project, this change in TEV equates to an additional 5.6% in total project costs, excluding the powerlines. Accounting for these economic costs in the decision-making process allows for a more holistic understanding of new energy project costs and net present benefits.