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Measuring and apportioning rents from hydroelectric power developments
This paper deals with economic rents arising from the development of hydroelectric generation on international watercourses. The paper briefly defines the concept of economic rent and its application to hydroelectric developments. It explores two areas of precedents that shows how the concept could...
This paper deals with economic rents arising from the development of hydroelectric generation on international watercourses. The paper briefly defines the concept of economic rent and its application to hydroelectric developments. It explores two areas of precedents that shows how the concept could be applied in developments on international watercourses. First, it looks at international law on the ownership and rights of use of such watercourses. Then it looks at past instances of international watercourse development that have used the idea of rent, or rent-like concepts, to determine how to share the benefits from the development. The paper notes that international convention and practice on this topic expect that riparian countries will negotiate the sharing of benefits from international developments. What the paper then seeks is a guide to such negotiations. The paper also devotes some attention to methods for quantifying the rents generated by projects in various situations: where a competitive market exists for the project ' s output; where no market exists; or where the hydroelectric development is part of a multipurpose project. In general, the total benefit from a cooperative development of an international watercourse is greater than the benefits from separate independent developments. Each participant should get from the cooperative development at least as much rent as it could have obtained from an independent development.
