Total social costs and benefits of long-distance hydropower transmission

Abstract

Increasing amounts of hydropower are being exported from Canada to the northern United States. Recently proposed projects would increase transmission capacity to U.S. population centers without increasing generation. This avoids generation-side impacts from hydroelectric development and introduces power to the U.S. energy mix that is dispatchable, unlike wind and solar, with greenhouse gas emissions generally lower than those of fossil fuels. There is, however, a lack of analysis comparing high upfront capital costs to social benefits and controversy over valuation of social costs of hydropower from existing generation given the negligible marginal cost of production. This analysis evaluates direct and indirect costs in comparison to alternatives for a 1250 MW transmission line from Canada to New York City currently under development to replace the recent loss of ∼15 TWh year^-1 of nuclear generation. For the case study considered, we find that long-distance transmission avoids $13.2 billion ($12.1-14.4 billion) in total social costs by 2050. This includes $4.2 billion ($3.4-5.1 billion) from premature mortality in disproportionately Hispanic and African American or Black counties (roughly 306 avoided deaths). In an extensive sensitivity analysis, results are robust to all modeling choices other than the cost assigned to hydropower: the nominal dollar value of hydropower imports (payments from buyer to seller) commonly used in cost-benefit analysis leads to substantial underestimates of net benefits from transmission projects. The opportunity cost of these imports (e.g., environmental benefits foregone in alternative export markets) is a better metric for cost but is difficult to estimate.