Economic Impacts of Dam Removals: Klamath Case Study
An overview of the methodology used to study the Klamath River dam removals and future study applications.
Brief Timeline Overview
1908 and 1962
PacifiCorp built the J.C. Boyle, Copco No. 1, Copco No. 2, and Iron Gate dams (Pacificorp, n.d.).
2000
The Federal Energy Regulatory Commission (FERC) relicensing process was initiated for PacifiCorp's dams on the Klamath River.
2001 to 2010
Tension between community groups grew high as a series of events invoked impassioned disagreements. During this time, water delivery curtailments were placed on farms, a significant salmon die-off occurred, restrictions were placed on ocean salmon fishing (DOI, DOC, NMFS, 2013), and activists fiercely advocated for dam removals.
2010
The Secretary of the Interior, governors of Oregon and California, PacifiCorp, and 44 other parties announced two interrelated settlement agreements to resolve conflicts in the Klamath basin and provide an outline for removing the four Lower Klamath dams: the Klamath Hydroelectric Settlement Agreement (KHSA) and Klamath Basin Restoration Agreement (KBRA).
2016
The 113th and 114th Congress failed to enact the KBRA and the KHSA by the January 1st, 2016 deadline. Motivated to find a solution, the determined parties amended the KHSA to require no longer the transfer of dams to DOI, successfully avoiding the need for congressional authorization.
Present
The four dams are expected to be removed by the end of 2024. The removal projects will reopen over 400 miles of habitat for threatened and endangered fish and other wildlife, making it the largest dam removal project in history.
Klamath Dam Removal Overview Report for the Secretary of Interior: An Assessment of Science and Technical Reports
Section 4.4.1.1 National Economic Development
How were the economic benefits analyzed?
- Researchers conducted a large-scale benefit-cost analysis for dams in and dams out scenarios.
- A combination of revealed preference, stated preference, and benefit transfer methods were used to valuate resources.
- This was the first study to use stated preference methods to estimate the value of dam removal.
What did the results show?
Section 4.4.1.2 Regional Economic Development
From an economic standpoint, the Klamath dam removals are justifiable. The framework used in this study can be applied to future dam removal scenarios to prove justification.
The Klamath River Renewal Cooperation
"The state utility commissions in both California and Oregon have determined that successful implementation of the amended Klamath Hydroelectric Settlement Agreement (KHSA), which includes dam removal as well as cost and liability protections for customers and PacifiCorp, is in the best interest of ratepayers...
Indirectly, KRRC’s expenditures in the Basin are expected to stimulate the creation of more than a thousand jobs in support industries such as food service and other support industries. Long term, healthy salmon runs would add an estimated 450 jobs in the commercial and recreational fishing industries in Oregon and California.
Klamath salmon support commercial fisheries worth $150 million per year and a local recreation industry that contributes millions to the Klamath Basin economy. Water quality and fisheries improvements will substantially reduce the risk of fishery disasters, such as the complete commercial closure of 2006, which cost more than $100 million in economic losses. Improved fisheries will benefit commercial and recreational fishermen alike.
The KHSA benefits the public as a whole by reducing public spending on disaster relief. Over the past ten years, hundreds of millions in public dollars has been spent on emergency measures for fishermen, tribes, and farmers in response to rotating Klamath crises. Implementing the KHSA is one piece of the broader solution to resolve the root causes of these problems." (Klamath River Renewal Corporation, n.d.).
Future Applications
Dam removals are becoming more common.
While dams can provide a variety of economic goods and services, including hydropower, water storage, navigation, flood control, and reservoir recreation, many dams are aging, becoming hazardous, or no longer serving the functions they originally intended (Bellmore, 2017).
National Inventory of Dams
91,815 Total Dams | Average Dam is 61 years old | 76% High Hazard Potential | 3% Dams Produce Hydropower
Total U.S. Dams
High Hazard Potential Classification
Dams Built Before 1970
Dams have finite utility due to aging infrastructure issues, reservoir sedimentation, and technological innovations that can render hydroelectric dams economically infeasible (Pohl, 2002). As dams age and become less structurally sound, they require upgrades and repairs. Dam removal is becoming a more viable option when the cost of repairing dams exceeds the cost of removal, especially where river restoration benefits are high (Bellmore et al., 2016). In some dam removal cases, the estimated repair costs are more than three times the removal cost (Born et al., 1998).
Dam removals are becoming more common. Aging infrastructure, coupled with growing interest in ecological restoration, has resulted in increased dam removals. By 2050, the U.S. can expect between 4,000 and 36,000 total dam removals (Habel et al., 2020).
The methodology used to value the economic impacts of the Klamath Dams removals can help guide future studies and support dam removal projects.
(Klamath River Renew Corporation, n.d.)
