GREENHOUSE GAS AND OTHER E NVIRONMENTAL, SOCIAL, AND ECONOMIC IMPACTS OF HYDROPOWER: A LITERATURE REVIEW CLIMATE ECONOMIC ANALYSIS FOR DEVELOPMENT, INVESTMENT, AND RESILIENCE (CEADIR) March 13, 2019 This report was made possible by the support of the American People through the United States Agency for International Development (USAID). It was prepared by Crown Agents-USA and Abt Associates. Recommended Citation: Manion, Michelle; Eric Hyman; Jason Vogel; David Cooley; Gordon Smith. 2019. Greenhouse Gas and Other Environmental, Social, and Economic Impacts of Hydropower: A Literature Review. Washington, DC: Crown Agents-USA and Abt Associates, Prepared for the U.S. Agency for International Development. Front photo source: Itaipu Dam in Brazil, taken by International Hydropower Association on July 8, 2011, https://upload.wikimedia.org/wikipedia/commons/8/8e/Itaipu_Aerea.jpg Crown Agents USA Ltd. 1 1129 20th Street NW 1 Suite 500 1 Washington, DC 20036 1 T. (202) 822-8052 1 www.crownagentsusa.com With: Abt Associates Inc. GREENHOUSE GAS AND OTHER ENVIRONMENTAL, SOCIAL, AND ECONOMIC IMPACTS OF HYDROPOWER: A LITERATURE REVIEW CLIMATE ECONOMIC ANALYSIS FOR DEVELOPMENT, INVESTMENT, AND RESILIENCE (CEADIR) Contract No.: AID-OAA-I-12-00038 Task Order: AID-OAA-TO-14-00007 Economic Policy Office and Global Climate Change Office Bureau for Economic Growth, Education and Environment U.S. Agency for International Development 1300 Pennsylvania Avenue NW Washington, D.C. 20523 Prepared by: Michelle Manion (Abt Associates) Eric Hyman (USAID) Jason Vogel (Abt Associates) David Cooley (Abt Associates), and Gordon Smith (Crown Agents-USA) March 13, 2019 DISCLAIMER This report is made possible by the support of the American people through the United States Agency for International Development (USAID). The authors’ views expressed in this publication do not necessarily reflect the views of USAID or the United States Government. TABLE OF CONTENTS Acronyms and Abbreviations ....................................................................................................... iv Acknowledgments ......................................................................................................................... vi Executive Summary ..................................................................................................................... vii 1. Introduction ........................................................................................................................... 1 2. GHG Impacts of Hydropower .............................................................................................. 3 2.1 Direct GHG Emissions of Hydropower ............................................................................................................. 3 2.2 Indirect GHG emissions of hydropower ............................................................................................................ 6 2.2.1 Indirect GHG Emissions from Physical and Environmental Features of Dams ................................ 7 2.2.2 Indirect GHG Emissions from Reservoir Design and Operations ...................................................... 9 2.3 Comparison of GHG Emissions of Hydropower with Other Sources of Electricity ............................ 10 2.3.1 Comparison of Direct GHG Emissions ................................................................................................... 11 2.3.2 Comparison of Life Cycle GHG Emissions ............................................................................................. 12 2.4 Key Findings and Recommended Practices for Reducing the GHG EMissions of Hydropower ......... 15 3. Other Environmental And Social Impacts of Hydropower ............................................. 16 3.1 Social and cultural Impacts of Hydropower ..................................................................................................... 19 3.1.1 Displacement and Resettlement ................................................................................................................ 19 3.1.2 Cultural and Archeological Impacts .......................................................................................................... 22 3.1.3 Health and Safety Risks ................................................................................................................................ 23 3.2 Environmental and Social Mitigation Measures ............................................................................................... 25 3.3 Impacts of Climate Change on Hydropower .................................................................................................. 28 3.4 Common Impact Assessment Guidelines or Protocols for Hydropower ................................................ 32 3.4.1 Hydropower Sustainability Assessment Protocol (HSAP) .................................................................. 32 3.4.2 World Commission on Dams Synthesis Guide ..................................................................................... 34 3.4.3 IFC Performance Standards on Environmental and Social Sustainability ......................................... 35 3.4.4 World Bank (2017) Environmental and Social Framework ................................................................ 35 3.4.5 Guidelines to Reduce Hydrological Uncertainty for Small-Scale Hydropower ............................. 36 4. Financial and Economic Benefits and Costs ...................................................................... 38 4.1 Cost-Benefit Analysis Concepts ......................................................................................................................... 38 4.1.1 Financial analysis and Economic analysis .................................................................................................. 38 4.1.2 Net present value and discounting ........................................................................................................... 38 4.1.3 Types of hydropower costs and benefits ................................................................................................ 39 4.2 Cost Effectiveness of Hydropower Versus Other Power Generation Technologies ........................... 43 Greenhouse Gas and Other Environmental and Economic Impacts of Hydropower in the Tropics: A Literature Review i 4.3 Potential for Energy Efficiency To Reduce the Demand for Hydropower ............................................... 52 5. Conclusions .......................................................................................................................... 53 References .................................................................................................................................... 54 LIST OF TABLES TABLE 1. Estimates of Global GHG Emissions from Reservoirs ......................................................................... 6 TABLE 2. How Characteristics of Hydropower Dams Affect Indirect GHG Emissions ................................ 7 TABLE 3. Life Cycle GHG Emissions By Type of Powerplant .............................................................................. 13 TABLE 4. Other Environmental Impacts of Hydropower .................................................................................... 17 TABLE 5. Siting, Design, and Operation to Reduce the Other Environmental Impacts of Hydropower Dams ................................................................................................................................................................................... 26 TABLE 6. Direct and Indirect Benefits and Costs of Hydropower .................................................................... 39 TABLE 7. Global Levelized Costs of Electricity from Non-Hydropower Sources in 2017 (U.S. Dollars/MWh) ................................................................................................................................................................... 48 Table 8. Difference Between LCOE and LACE for New Generation Entering Service in the United States in 2022 (U.S. Dollars/MWh) ............................................................................................................................. 50 LIST OF FIGURES FIGURE 1. Main Processes for CO2 and CH4 Production in Tropical and Equatorial Reservoirs ............... 5 FIGURE 2. Life Cycle GHG Emissions of Energy Technologies (Grams of CO2e/KWh) ............................. 14 FIGURE 3. Cantareira Reservoir in Brazil Under Drought Conditions ............................................................ 29 FIGURE 4. Sample Spider Diagram From the Hydropower Sustainability Assessment Protocol for the Operations Stage ............................................................................................................................................................. 34 FIGURE 5. Hydropower Potential and Sediment Production ............................................................................... 41 FIGURE 6. Comparison of LCOE for Renewable Energy Technologies, by Region or Country ................. 46 FIGURE 7. Energy Efficiency Potential, Realized and Unrealized, By Sector in 2035 ..................................... 52 Greenhouse Gas and Other Environmental and Economic Impacts of Hydropower in the Tropics: A Literature Review ii LIST OF BOXES BOX 1. Types of Hydropower Dams ......................................................................................................................... 1 BOX 2. GHG Emissions from Land Clearing