74
infrastructure projects. Such distributive effects can be assessed quantitatively and
qualitatively to build up a knowledge base for potential solutions (TEEB 2012 ,
p. 31). In case distributional effects are not suffi ciently taken into account potential
confl icts may incur substantial economic (welfare) losses.
Involuntary or uncompensated re-settlements and losses of heritage sites may
provide an example. Creation of large reservoirs for hydropower often requires that
farmers and settlements are to be relocated. This entails not just the loss of nutrient
rich high-yield marsh soils for farming, but often historically important settlement
areas, cultural heritage sites, and aesthetic and recreational services. Some of these
values may never be recovered – such as the loss of cultural heritage. Other values
may be recovered such as the value of agricultural production. It is basically an ethical and often a political question of whether these values can be offset, compensated
for or outweighed by benefi ts.
Another example may be provided by trans-boundary water confl icts caused by
different goals and needs in different countries along the same river. Water is rival
in its use – meaning that water used for a specifi c purpose is often not available for
other uses. These trade-offs occur over space and time when hydropower is required
upstream in winter, but downstream agricultural irrigation is required in summer
like in the Syrdarya basin (see Chap. 7 ).
Economically speaking these “social costs” (impacts on ecosystem services,
vulnerable groups or indigenous people that are not covered in market relations)
have to be accounted for – otherwise an infrastructure investment decision like a
dam might constitute a decision that turns out to be ineffi cient in terms of welfare.
Whether this is practically feasible is not just a question of a proper assessment but
also political will, power, and (democratic) institutions.
5.3.4 Potential and Limits of Economic Analysis
An informed decision on whether to build or not to build e.g. a large dam is not just
a question of “yes” or “no” but also about different options to realise a certain goal,
let it be fl ood control, food security, or electricity generation. Such a decision
involves inevitable trade-offs. A well-designed analysis of different options and
their associated costs and benefi ts can show which alternative actually yields the
largest positive net benefi t.
Figure 5.3 exemplifi es hypothetical use scenarios for fresh water bodies. Optimising
a single service or benefi t dimension such as hydropower or ecosystem services does
not necessarily yield an overall optimum. Finding balanced solutions that take into
account multiple value dimensions may create the largest net benefi ts.
A comprehensive analysis that compares the advantages (benefi ts) and disadvantages (costs) of different scenarios for the use of water and wetland resources among
multiple value dimensions can identify the best choice option. One policy goal could
be secure water access and availability for a certain region. Another policy goal might
be renewable energy production by hydropower. A third policy goal might be
B. Hansjürgens et al.
infrastructure projects. Such distributive effects can be assessed quantitatively and
qualitatively to build up a knowledge base for potential solutions (TEEB 2012 ,
p. 31). In case distributional effects are not suffi ciently taken into account potential
confl icts may incur substantial economic (welfare) losses.
Involuntary or uncompensated re-settlements and losses of heritage sites may
provide an example. Creation of large reservoirs for hydropower often requires that
farmers and settlements are to be relocated. This entails not just the loss of nutrient
rich high-yield marsh soils for farming, but often historically important settlement
areas, cultural heritage sites, and aesthetic and recreational services. Some of these
values may never be recovered – such as the loss of cultural heritage. Other values
may be recovered such as the value of agricultural production. It is basically an ethical and often a political question of whether these values can be offset, compensated
for or outweighed by benefi ts.
Another example may be provided by trans-boundary water confl icts caused by
different goals and needs in different countries along the same river. Water is rival
in its use – meaning that water used for a specifi c purpose is often not available for
other uses. These trade-offs occur over space and time when hydropower is required
upstream in winter, but downstream agricultural irrigation is required in summer
like in the Syrdarya basin (see Chap. 7 ).
Economically speaking these “social costs” (impacts on ecosystem services,
vulnerable groups or indigenous people that are not covered in market relations)
have to be accounted for – otherwise an infrastructure investment decision like a
dam might constitute a decision that turns out to be ineffi cient in terms of welfare.
Whether this is practically feasible is not just a question of a proper assessment but
also political will, power, and (democratic) institutions.
5.3.4 Potential and Limits of Economic Analysis
An informed decision on whether to build or not to build e.g. a large dam is not just
a question of “yes” or “no” but also about different options to realise a certain goal,
let it be fl ood control, food security, or electricity generation. Such a decision
involves inevitable trade-offs. A well-designed analysis of different options and
their associated costs and benefi ts can show which alternative actually yields the
largest positive net benefi t.
Figure 5.3 exemplifi es hypothetical use scenarios for fresh water bodies. Optimising
a single service or benefi t dimension such as hydropower or ecosystem services does
not necessarily yield an overall optimum. Finding balanced solutions that take into
account multiple value dimensions may create the largest net benefi ts.
A comprehensive analysis that compares the advantages (benefi ts) and disadvantages (costs) of different scenarios for the use of water and wetland resources among
multiple value dimensions can identify the best choice option. One policy goal could
be secure water access and availability for a certain region. Another policy goal might
be renewable energy production by hydropower. A third policy goal might be
B. Hansjürgens et al.