The Economics of Competing Water Uses under a FERC Licensing Agreement: Estimation of Property Value, Recreation, and Hydroelectric Impacts

Abstract

Reservoirs provide a variety of services with economic values across multiple sectors. As demands for reservoir services continue to grow and precipitation patterns evolve, it becomes ever more important to consider the integrated suite of values and tradeoffs that attend changes in water uses and availability. Section 316 (b) of the Clean Water Act requires that owners of certain water cooled power plants evaluate technologies and operational measures that can reduce their impacts to aquatic organisms. The studies must discuss the social costs and benefits of alternative technologies including cooling towers (79 <i>Fed. Reg. </i> 158, 48300 - 48439). Cooling towers achieve their effect through evaporation. This manuscript estimates the property value, recreation, and hydroelectric generation impacts that could result from the evaporative water loss associated with installing cooling towers at the McGuire Nuclear Generating Station (McGuire) located on Lake Norman, North Carolina. Although this study specifically evaluates the effects of evaporative water loss from cooling towers, its methods are applicable to estimating the economic benefits and costs of a new water user or reduced water input in any complex reservoir system that supports steam electric generation, hydroelectric generation, residential properties, recreation, irrigation, and municipal water use.