Evaluating the monetary environmental compensation over a Hydroelectric Power Plant based on opportunity cost simulation, GIS, and remote sensing images

Abstract

Abstract In Brazil, electricity generation comes mainly from Hydroelectric Power Plants (HPP) that accounts for 65% of the national production. The establishment of a given HPP promotes significant land surface changes since vast areas are covered by the water reservoir. To mitigate such impact, a percentual of the produced energy is charged as a monetary environmental compensation (MEC). In this study, a WorldView-2 scene was used to delineate the flooded area. After, based on Landsat-5/TM and Landsat-7/ETM\xa0+\xa0scenes, we map the major land use and land cover classes before establishing an HPP in the Southern Santa Catarina Plateau (Southern Brazil). Then, based on the resulted land cover map, we address the MEC s effectiveness by simulating in a GIS environment the opportunity costs over the productivity of the agricultural areas lost by the HPP water reservoir. Agricultural statistics databases were consulted to obtain historical values and mean productivity of corn, soybean, and beef cattle. Results show that MEC was efficient for the timeframe of 2006–2018. The opportunity cost reveals a positive benefit value of US$4,738,862.03 (R$6,123,292.25) for the directed affected municipalities. In summary, MEC was more beneficial than maintaining agricultural activities. This research brought a simple methodology of low cost to evaluate a given HPP s effectiveness, from an economic point of view, for the directed affected municipalities. The presented method can be applied to other similar enterprises and other HPPs in Brazil.