How relevant are non-use values and perceptions in economic valuations? The case of hydropower plants

energies Article How Relevant Are Non-Use Values and Perceptions in Economic Valuations? The Case of Hydropower Plants Sara Sousa 1, Anabela Botelho 2, Lígia M. Costa Pinto 3,* and Marieta Valente 3 1Coimbra Business School/ISCAC and CERNAS, Polytechnic Institute of Coimbra, 3040-316 Coimbra, Portugal 2DEGEIT and GOVCOPP, University of Aveiro, 3810-193 Aveiro, Portugal 3EEG and NIPE, University of Minho, 4710-057 Braga, Portugal *Correspondence: [email protected]; Tel.: +351-253-604-586 Received: 14 July 2019; Accepted: 1 August 2019; Published: 2 August 2019   Abstract: The construction of hydropower plants, particularly of large ones, is far from being a consensual decision: advocates defend their construction based on the unquestionable benefits hydropower provides, while critics argue that these facilities are far from harmless and cause adverse impacts on the environment, being not only against the construction but also demanding the destruction of existing ones. We review a selection of recent empirical studies concerning impacts of hydropower developments, to make a case for the consideration of non-use values in the economic valuation of the environmental and social impacts of hydropower plants, through the use of non-market valuation methodologies. Additionally, we present data from a case study of hydropower economic valuation, where different subgroups of the population with differing degrees of contact and familiarity with hydropower rate their perception of impacts. Respondents with more contact are less penalizing of hydropower than other respondents. We conclude that non-use values are non-negligible and can be valued through stated preference methods, but researchers should take into consideration perceptions and the role of users and non-users. Non-use values should thus not be neglected by policy makers and regulators at the planning and public consultation stages or as part of the decommissioning decision. Keywords: total economic value; hydropower plants; economic valuation; public perceptions 1. Introduction Appraising the social desirability of an energy generation project is a complex task. From an economic perspective, a project is considered efficient if the sum of its benefits outweighs its costs in financial, economic, social and environmental terms, in which case social welfare increases relative to the initial situation. Focusing only on benefits and costs with a monetary value in the market neglects what can potentially be a significant component of social value. In particular, in the case of environmental impacts of energy projects, there are benefits and costs that may impact the net worth of a project but are not directly valued in the market. When it comes to renewable energies sources (RES), there are not only environmental benefits, in particular the reduction of greenhouse gas (GHG) emissions, but also non-negligible negative impacts, which need to be considered [ 1 – 3 ]. The same happens with the psychological and social issues: if, on the one hand, hydropower, as a renewable source, benefits from wide acceptance by the general population, the same is not true among local residents whose well-being is clearly affected by the day-to-day operation of hydropower plants in the vicinity of their residences [ 4 – 6 ]. To account for economic values of these adverse impacts, economists have included in their toolkit Energies 2019,12, 2986; doi:10.3390/en12152986 www.mdpi.com/journal/energies Energies 2019,12, 2986 2 of 18 non-market valuation methods which allow researchers and policy makers to value the externalities of projects, in particular to provide a monetary approximation to the so-called non-use values. By monetizing different components of the total economic value (TEV) associated with environmental and social impacts of a project, it is possible to compare it like-for-like with financial and economic net returns. In this paper, we focus on the case of hydropower plants, whose construction decision is difficult and far from being consensual, given the many implications for development, the environmental and social justice [ 7 ]. On the one hand, many agents defend the construction of hydropower plants based on the unquestionable benefits they provide for energy and water supply, flood management, irrigation possibilities, promotion of tourism and the many associated employment opportunities (e.g., [ 8 , 9 ]). There are others who consider that these facilities are far from being harmless and that the advantages clearly do not compensate the many adverse impacts on the environment [ 4 , 10 – 12 ]. In addition to affecting the environment, the day-to-day operation of hydropower plants can be extremely uncomfortable for local populations, generating a clear decrease in the well-being of these populations. Richter [ 13 ] highlights that communities living downstream from damned river have been affected in their river-dependent livelihoods associated with fish and agricultural activities, but have often been ignored when appraising dams’ impacts. Additionally, hydropower projects have often implied the displacement of local communities and their resettlement elsewhere, sometimes involuntary [14–17]. These environmental and social adverse impacts associated with hydropower justify the increasing lack of social acceptance particularly felt among local communities, and an increasing number of studies making the case for the option of dam removal as an answer for many critical social and environmental problems (e.g., [ 18 – 23 ]). Furthermore, nowadays it is estimated that in Europe and the US more hydropower plants are being decommissioned than built [ 24 ], so it is likely that the environmental and social consequences of dam removal will become increasingly pertinent, and even the science around this issue will need further developments [25,26]. The controversies around hydropower are amplified when it comes to large dam projects. Noteworthy impacts of large projects involve large population displacements, and have in the past included human rights abuses during the pre-construction phases [ 27 ]. The accelerated construction of large dams in previous years, gave rise to a global debate under the World Commission on Dams [ 28 ] in the late 2000s, but that is still pertinent a decade later [ 29 ] and today [ 30 ]. One of the main recommendations from the commission as summarized by its secretary-general was that “decisions about whether a dam should be built and how it should be operated, or whether better alternatives exist, must reflect the multiple impacts and risks and benefits that such projects imply for different stakeholders.” ([29], p. 2). As we can infer, hydropower plants’ adverse impacts have been well identified in the literature for more than two decades; however, cost-benefit analysis on hydropower developments continue to neglect these impacts since the losses and reductions in amenities are mostly non-market goods or services, and therefore are not captured by market prices. Additionally, many of these losses are valuable for society in terms of non-use values but their consideration in monetary terms is not straightforward. Mattmann et al. [ 1 ] note in a recent meta-analysis of hydropower externalities that much more attention has been devoted to the economic valuation of externalities associated with other renewables other than hydropower. However, as the importance of RES for electricity production continues to increase (the International Energy Agency estimates that in 2017 renewables account for one quarter of electricity generation, which is expected to rise to 41% by 2040), hydropower is, and is expected to continue to be, the most important RES [ 31 ]. It is therefore important to understand how to account for all components of the TEV of environment impacted by hydropower projects, both old and new. In a context of continuing importance of hydropower for electricity generation, we propose to guide the reader through the economic concepts of TEV and stated preference methods as applied to dams and hydropower, so as to present an overview of recent studies on the economic valuation of non-use values. While other renewables have attracted more attention from researchers using this Energies 2019,12, 2986 3 of 18 economic toolkit, the few studies conducted and surveyed in this paper that have applied non-market valuation methods have opted to value non-use values using stated preference methods. These studies on the one hand highlight the non-negligible importance of non-use values, giving strength to the argument that these should be fully acknowledged. On the other hand, these studies mostly focus on the operation of existing dams, rather than on ex-ante analyses or removal cases, thus identifying a gap in the literature, all the more relevant given both the decommissioning of older infrastructures and commissioning of new hydropower plants in developing countries [24]. Furthermore, the value attributed to impacts of hydropower, in particular non-use components (impacts on nature, landscape interference, heritage destruction, etc.), is likely to differ according to different subgroups of the population. On the one hand, local residents will not only value some of those components for their existence value but also for their use value, while other people will mostly value them as non-users. On the other hand, the acquaintance and familiarity with hydropower will change how individuals perceive those impacts in terms of severity and nuisance, which will in turn impact value estimates. In this paper, we present evidence to illustrate the importance of considering different population subgroups in terms of perception of impacts. While we would expect individuals closer to hydropower plants to perceive their impacts more severely, we observe that, on the contrary, it is those with less contact, whom we deem to be non-users, who are more critical. We believe this is a result that warrants future research. This is a relevant result for future studies, that should adequately control for the relation of respondents to hydropower projects in the elicitation of use and non-use values. The remainder of this paper is organized as follows. Section 2provides an overview of the key concept of TEV and discusses different components of TEV affected by the activity of hydropower plants based on a review of empirical studies since the year 2000 that have used economic non-market valuation methods to study hydropower. This section aims to be a quick and up-to-date reference for policy makers and practitioners on the main concepts in the economist’s toolkit that can be applied to appraise new and existing hydropower projects without neglecting non-use values. In Section 3, we present the case study and the results that illustrate how different population subgroups perceive hydropower impacts. This section extends the existing literature by highlighting that care should be taken when approaching different population groups to elicit non-use values. Finally, the main conclusions are presented along with policy and research implications. 2. Hydropower Adverse Impacts Through the Lens of Economic Valuation Methods 2.1. Introduction Despite the well-known benefits for water and energy supply, flood management and irrigation, hydropower plants can also have negative impacts on the environment, including imposing biodiversity loss and adverse effects on the surrounding fauna and flora, requiring the flooding of cultivable land, contributingtothedegradationof waterquality, generating noise, intrudingon landscape, andrequiring the destruction or displacement of sites of architectural or historical importance [ 1 ]. Moreover, the activity of dams, particularly large dams, may cause psychological and social problems, especially for those living in the local communities near the facilities. Most of these damages are not directly included in the appraisal of hydropower developments mainly because their economic value is difficult to estimate, since there are no markets for the goods and services impacted and, therefore, prices are not available, which does not necessarily mean they have no value. Based on a selective literature review for empirical studies, we present in Table 1a collection of 29 studies (from 2000 to 2018) on economic valuation of the environmental and social impacts caused by the operation of hydropower facilities. These purport to infer, through the application of different non-market economic valuation methods, different environmental and social values directly or indirectly affected by the activity of dams. Using these studies as a reference, we will next present the concept of TEV as related to hydropower projects and how non-market valuation methods allow researchers to approximate those values, so that they are not neglected in the appraisal of projects. Energies 2019,12, 2986 4 of 18 Table 1. Economic Valuation of the Dams’ Impacts. Methods Values Study Country Attributes Affected REVEALED PREFERENCE TRAVEL COST ONLY USE VALUES Loomis (2002) [32] USA River recreation McKean et al. (2005) [33] USA River recreation Hynes & Hanley (2006) [34] Ireland Whitewater kayaking Robbins & Lewis (2008) [35] USA Recreational fishing Getzner (2014) [36] Austria River recreation Borisova et al. (2017) [37] USA Recreational activities HEDONIC PRICING Lewis et al. (2008) [38] USA Aquatic ecosystems, fauna, flora, recreation activities, attractiveness of houses near the river Provencher et al. (2008) [39] USA Property values affected from dam removal Bohlen & Lewis (2009) [40] USA Rivers, fish, wildlife, local communities, residential properties values STATED PREFERENCE CHOICE EXPERIMENTS BOTH USE AND NON-USE VALUES Sundqvist (2002) [41] Sweden Water level, vegetation and fish Bergmann et al. (2006) [42] Scotland Landscape, wildlife, air pollution and employment Han et al. (2008) [43] Korea Fauna, flora, forest and historical remains Kataria (2009) [44] Sweden Fish, birds, benthic invertebrates and vegetation Vega & Alpízar (2011) [45]Costa Rica River water flow and scenic view Klinglmair et al. (2015) [46] Austria Nature and landscape Xu et al. (2015) [47] China Drinking water sources Botelho et al. (2015) [48] Portugal Fauna and flora, heritage, noise and landscape Tabi, & Wüstenhagen (2017) [5] Switzerland Social acceptance CONTINGENT VALUATION Michailidis (2006) [49] Greece Agriculture, irrigation, tourism, water quality, recreation, health, social and environment Hakansson (2009) [50] Sweden Wild salmon Ehrlich & Reimann (2010) [51] Estonia Natural river water flow Alp & Yetis (2010) [52] Turkey Land Gunawardena (2010) [53] Sri Lanka Historical monuments, landscape, recreational activities, river scenic view, carbon storage, forests and home garden productivity Ponce et al. (2011) [54] Chile Landscape Aravena et al. (2012) [55] Chile Landscape, fauna, flora, river sports, agriculture, tourism, fishing and displaced inhabitants Jones et al. (2016) [6] USA Social issues Botelho et al. (2016) [56] Portugal Social sustainability Jones et al. (2017) [57] USA GHG emissions reduction Jones et al. (2018) [58] USA Fauna and flora, pollution, GHG emissions, recreation, rural life, among others Energies 2019,12, 2986 5 of 18 2.2. The Concept of Total Economic Value (TEV) The concept of TEV is used as a framework that allows researchers to measure the economic value of non-market assets, as is the case of environmental goods and services. It represents a reference framework to assess changes in individuals’ well-being from environmental impacts associated with a new policy or project [ 59 ]. The concept of TEV was developed to ensure that the value of the natural environment included more than simply the marketable raw materials and physical products. Neglecting other components of the value of the environment would lead to systematically underestimating the value of environmental goods and services, and in turn to decisions that would be suboptimal from an economic perspective, this generating losses for society [60]). There are several approaches to the definition of TEV. Bateman et al. ([ 61 ], p. 28) state that “the net sum of all relevant willingness-to-pay (WTP) and willingness-to-accept (WTA) defines the TEV of any change in wellbeing due to a policy or project”. According to Torras ([ 62 ], p. 286) it is “the sum of its direct, indirect, option, and existence values”. Other studies consider the sum of the non-marketable and marketable values ([ 62 ], p. 283). Although distinct, these definitions are complimentary in that all contribute to better understanding this encompassing concept. The TEV of an environmental good or service is associated with its attributes, which can either relate to the use or non-use values of the good or service. According to some authors (e.g., [ 59 , 61 ]), use values mean there is an actual use of the good or service, or that the use is planned or possible. As for actual use, it can be direct or indirect. The actual direct use value can be first of all extractive, which implies that the quantity left for others is reduced (e.g., the extraction of water for irrigation); secondly, it can be non-extractive when the quantity if nor reduced for others (e.g., enjoying recreational amenities such as water sports or bird watching) [ 63 , 64 ]. In the case of recreational activities afforded by rivers, there is a decrease in this direct use value when a particular area is dammed-up [ 36 ]). On the contrary, the construction of a new hydropower project may create new recreational activities associated with the reservoir and thus generate a benefit rather than a cost. The actual indirect use value is experienced indirectly by individuals or as a consequence of the primary function of a given resource. This is the case of regulating services provided by the ecosystem which contribute indirectly to the enjoyment of other final consumption amenities (e.g., forests’ ability to sequester CO 2 and produce O 2 creates positive climate externalities and reduce health risks; hydropower as an alternative to fossil fuels contributes to reduce greenhouse gas emissions) (e.g., [57,62–65]). The planned use component refers to use in a specific future date (e.g., a planned recreational trip to a natural area) [59,61]. Actual and planned uses are straightforward concepts, which is not the case with possible use, also known as option value. This notion was first introduced by Weisbrod [ 66 ] to define the price of conservation, namely the willingness-to-pay for preserving a good or service with only the option of a future use. As stressed by Alcamo et al. ([ 63 ], p.133), “despite individuals not currently be deriving any utility from the environmental goods or services, they still have the option to use them in the future”. This is not a consensual concept, with different interpretations in the literature: only uncertain benefits may be considered (e.g., [ 62 ]) or benefits already known but whose use was delayed (because of irreversibility for instance) or alternatively both types can be considered (e.g., [ 59 , 61 ]. In some studies (e.g., [ 63 , 64 ]) both certain and uncertain future benefits are considered in the TEV, respectively option value and quasi-option value. Finally, it is important to underline that sometimes option value and quasi-option value are not considered as use value, but rather as a component of non-use value. Non-use values or passive use values correspond to cultural, moral, religious or aesthetic attributes as perceived by the individual who is making the assessment [ 67 ]. For instance, Freeman [ 68 ] considers that non-use value is the component that is not captured by revealed preference techniques. For Kolstad [ 69 ], non-use values result from the satisfaction of knowing that ecosystem services are conserved and that others can access to them in the present or in the future. Others argue that non-use value refers to the willingness-to-pay to preserve the existence of a good or service even in the absence Energies 2019,12, 2986 6 of 18 of actual, planned or possible use [ 59 , 61 ]. We follow this latter approach, according to which non-use value can be classified in terms of (a) existence value, (b) altruistic value, and (c) bequest value. Existence value was first defined by Krutilla [ 70 ] as the satisfaction that an individual gets from knowing that good or service will be preserved, and is independent of personal present or future use. Motivations vary and may include the concern for the asset itself (e.g., a threatened species) or a feeling of responsibility for the asset. Some authors (e.g., [ 71 , 72 ]) do not make a distinction between the closely related concepts of existence value and intrinsic value: existence value depends on individual preferences whereas intrinsic value is independent of human needs and tastes. For Madariaga et al. [73], existence value is associated with non-use value, and even a type of use value like “vicarious consumption” (e.g., viewing TV programs about tropical wildlife). At the other extreme, Bergstrom and Reiling [ 74 ] limit existence value to cognitive value, that is the value that comes from being able to “think about” the asset. Altruistic value is related to intra-generational equity concerns, and the individual derives value from the fact others in the present can benefit from the good or service. Similarly, bequest value extends the concern to inter-generational equity and considers the next and future generations [61,64,75]. As argued by Crowards [ 76 ], non-use values do not depend on the expected or present use or contact with the good or service, but merely on the knowledge that it exists, either for its own sake, to benefit others or to benefit future generations. As such, concerns about the irreversibility associated with the use of the resource are accounted for in the concept of TEV. Similarly, intraand inter-generational equity concerns are considered, albeit from the perspective of present individuals who are making the assessment. To summarize, Figure 1presents TEV by types of value according to the approaches put forward by several authors. Energies 2019, 12, x FOR PEER REVIEW 6 of 18 Existence value was first defined by Krutilla [70] as the satisfaction that an individual gets from knowing that good or service will be preserved, and is independent of personal present or future use. Motivations vary and may include the concern for the asset itself (e.g., a threatened species) or a feeling of responsibility for the asset. Some authors (e.g., [71,72]) do not make a distinction between the closely related concepts of existence value and intrinsic value: existence value depends on individual preferences whereas intrinsic value is independent of human needs and tastes. For Madariaga et al. [73], existence value is associated with non-use value, and even a type of use value like “vicarious consumption” (e.g., viewing TV programs about tropical wildlife). At the other extreme, Bergstrom and Reiling [74] limit existence value to cognitive value, that is the value that comes from being able to “think about” the asset. Altruistic value is related to intra-generational equity concerns, and the individual derives value from the fact others in the present can benefit from the good or service. Similarly, bequest value extends the concern to inter-generational equity and considers the next and future generations [61,64,75]. As argued by Crowards [76], non-use values do not depend on the expected or present use or contact with the good or service, but merely on the knowledge that it exists, either for its own sake, to benefit others or to benefit future generations. As such, concerns about the irreversibility associated with the use of the resource are accounted for in the concept of TEV. Similarly, intraand intergenerational equity concerns are considered, albeit from the perspective of present individuals who are making the assessment. To summarize, Figure 1 presents TEV by types of value according to the approaches put forward by several authors. Figure 1. Total Economic Value. Adapted from Bateman ([61] p. 29), Pearce ([75] p. 87) and TEEB ([64] p. 14). Non-use values are thus relevant in the analysis of the costs and benefits of a project with impacts on environmental and cultural assets. Their consideration and estimation is however not always straightforward and depends on the specificities of the case study and who is being asked to value a particular good or service. When hydropower impacts for example a natural landscape, as in the case of a waterfall region in Estonia, the aesthetic and touristic value would be significantly decreased by a proposed reduction in the water flow. Ehrlich [51] conducts a study to estimate how much national residents would pay to preserve the water flow. For Estonians who are likely to visit the region, the elicited values are use vales, whereas for other Estonians they would constitute nonuse values. Total economic value Use value Actual use Direct use Consumptive Non consumptive Indirect use Option value Non-use value For others Altruism Bequest Existence Figure 1. Total Economic Value. Adapted from Bateman ([61] p. 29), Pearce ([75] p. 87) and TEEB ([64] p. 14). Non-use values are thus relevant in the analysis of the costs and benefits of a project with impacts on environmental and cultural assets. Their consideration and estimation is however not always straightforward and depends on the specificities of the case study and who is being asked to value a particular good or service. When hydropower impacts for example a natural landscape, as in the case of a waterfall region in Estonia, the aesthetic and touristic value would be significantly decreased by a proposed reduction in the water flow. Ehrlich [ 51 ] conducts a study to estimate how much national residents would pay to preserve the water flow. For Estonians who are likely to visit the region, the elicited values are use vales, whereas for other Estonians they would constitute non-use values. Energies 2019,12, 2986 7 of 18 In a case study in Sweden, Hakansson [ 50 ] studies the benefit for society of improving the wild salmon population negatively impacted by hydropower. A survey of the general population using a non-market valuation technique reached both anglers and non-anglers, whose perceptions of the benefit from this improvement in the salmon population may differ. For anglers, elicited values are more likely to be mostly use values, albeit potential, whereas for non-anglers, elicited values are likely to be solely non-use values. Additionally, the perception of impacts of hydropower among different population groups are likely to differ, as in the population of anglers and non-anglers or in the case we present in this paper, among residents near projects and non-residents. We present evidence from a case study to support this hypothesis. 2.3. An Overview of Non-Market Valuation Methods Non-market valuation methodologies aim to estimate the value of environmental goods and services by considering individual preferences through the common metric of money [ 68 , 77 , 78 ]. The different methodologies have traditionally been classified as indirect methods (the so-called revealed preference methods) or direct methods (the so-called stated preference methods). A revealed preference method gathers information about individual preferences for marketable goods that are related to the non-market good under valuation, either as complements or substitutes. These methods can only measure the use value of the goods or services. Specifically, there is the travel cost methods, the hedonic price method, and the averting behaviour technique. Stated preference methods directly elicit individual preferences for a change in the level of provision or quality of an environmental resource, normally through questionnaires. The elicitation of individual valuations is developed within a hypothetical market scenario for the environmental good or service. These methods allow researchers to measure both the use and the non-use values of goods. There are two main approaches: the choice modelling and the contingent valuation approaches. The former includes choice experiments, contingent ranking, contingent rating and paired comparisons. In addition to eliciting total value from users and nonusers and being suitable for ex-ante and ex-post application, we stress that by incorporating non-use values into valuation procedures, the stated preference methodologies can more accurately reflect the full worth that society attributes to an environmental asset. These techniques are diagrammatically presented in Figure 2. Energies 2019, 12, x FOR PEER REVIEW 7 of 18 In a case study in Sweden, Hakansson [50] studies the benefit for society of improving the wild salmon population negatively impacted by hydropower. A survey of the general population using a non-market valuation technique reached both anglers and non-anglers, whose perceptions of the benefit from this improvement in the salmon population may differ. For anglers, elicited values are more likely to be mostly use values, albeit potential, whereas for non-anglers, elicited values are likely to be solely non-use values. Additionally, the perception of impacts of hydropower among different population groups are likely to differ, as in the population of anglers and non-anglers or in the case we present in this paper, among residents near projects and non-residents. We present evidence from a case study to support this hypothesis. 2.3. An Overview of Non-Market Valuation Methods Non-market valuation methodologies aim to estimate the value of environmental goods and services by considering individual preferences through the common metric of money [68,77,78]. The different methodologies have traditionally been classified as indirect methods (the so-called revealed preference methods) or direct methods (the so-called stated preference methods). A revealed preference method gathers information about individual preferences for marketable goods that are related to the non-market good under valuation, either as complements or substitutes. These methods can only measure the use value of the goods or services. Specifically, there is the travel cost methods, the hedonic price method, and the averting behaviour technique. Stated preference methods directly elicit individual preferences for a change in the level of provision or quality of an environmental resource, normally through questionnaires. The elicitation of individual valuations is developed within a hypothetical market scenario for the environmental good or service. These methods allow researchers to measure both the use and the non-use values of goods. There are two main approaches: the choice modelling and the contingent valuation approaches. The former includes choice experiments, contingent ranking, contingent rating and paired comparisons. In addition to eliciting total value from users and nonusers and being suitable for ex-ante and ex-post application, we stress that by incorporating non-use values into valuation procedures, the stated preference methodologies can more accurately reflect the full worth that society attributes to an environmental asset. These techniques are diagrammatically presented in Figure 2. Figure 2. Economic Valuation Methods. Adapted from Garrod and Willis ([79] p. 6), Bateman et al. ([61] p. 30) and Pearce et al. ([59] p. 88). Preferences Revealed Preferences Travel Cost Method Hedonic Pricing Averting Behaviour Stated Preferences Choice Modelling Choice Experiments Contingent Ranking Contingent Rating Paired Comparisons Contingent Valuation Figure 2. Economic Valuation Methods. Adapted from Garrod and Willis ([ 79 ] p. 6), Bateman et al. ([ 61 ] p. 30) and Pearce et al. ([59] p. 88). Energies 2019,12, 2986 8 of 18 Fromtheinformation in Table1, weobservethat ofthe studiesreviewed, aminority usethe revealed preferencesmethods: seven fromthe USA,one fromIrelandand onefromAustria. One ofthe techniques is the travel cost approach in References [ 32 – 35 ], that can be used to value the hydropower’ impacts over recreational rivers’ values. The other two studies apply the hedonic pricing technique [ 38 , 40 ], which collects data for example from property markets, where an environmental attribute is implicitly traded. In these two specific studies, the authors infer the use value of environmental goods (aquatic ecosystems, fauna, flora and recreation activities) based on the residential property values. The other twenty studies presented in Table 1use the stated preferences methods. Of these, nine studiesapplychoiceexperiments, and theremainingstudies applythe contingentvaluationmethodology. All the studies using the choice experiment technique share the theoretical framework in which respondents are presented with a series of alternatives, differing in terms of attributes and levels, and are asked to choose their most preferred (for guidance on how to apply this technique refer for example to References [ 80 , 81 ]). This approach allows the computation of the willingness-to-pay of respondents for the environmental attributes of the good or service, and can thus show the relative importance of some environmental improvements. The results can then be used as the basis for decisions as to projects that affect the environmental assets. The main concerns in these specific choice experiment studies are estimating the values of river water flow, water level, drinking water quality, fauna, flora, forest, historical remains and landscape. These represent not only use values (option, actual, indirect, direct, non-consumptive and consumptive), but also non-use values (existence, for others, altruism and bequest). The contingent valuation technique was applied in 11 studies on the economic valuation of dams’ environmental impacts and consists of a questionnaire that directly elicits consumers’ preferences. A hypothetical market is described where the good in question can be traded and respondents are asked to indicate their maximum willingness-to-pay or minimum willingness-to-accept a compensation for a hypothetical change in the level of the environmental good or service (for guidance on how to apply this method refer for example to Johnston et al. [ 81 ]). These specific contingent valuation studies propose to mainly assess the values of land use, landscape impacts, impacts on fauna and flora, historical monuments, recreational river sports, and also some social issues. These are use values (option, actual, indirect, direct, non-consumptive and consumptive) and non-use values (existence, for others, altruism and bequest). Three of the studies in Table 1[ 5 , 6 , 56 ] emphasize key social issues particularly felt among the local communities who often are against the construction of the hydropower facilities in the proximity of their residences. Social acceptance, or the lack of it, represents one of the most important concerns regarding hydropower development, since the construction and operation of dams is associated to considerable social impacts particularly imposed on the local communities [ 28 , 82 , 83 ]. There is empirical evidence that hydropower projects may worsen the living conditions of local communities and in particular of those who are involuntary displaced and resettled [ 28 , 83 , 84 ]. Hence, considering and evaluation these social impacts caused by dam projects, and eventual displacements and resettlements would be of great importance to hydropower development, as well as devising and implementing measure to mitigate the adverse social impacts [14]. Regarding the application of these two stated preference methodologies, it is important to underline how valuable they are for allowing researchers to infer not only use values, but TEV including both use and non-use values from users and non-users. The latter potentially represent a non-negligible part of the value that individuals and society in general attributes to the environment. In fact, a considerable number of individuals may never expect to make use of some environmental goods and services, but still derive utility from their conservation. Therefore, economic non-use values are increasingly recognized as an important component of TEV and thus a key element when making decisions that can affect the environment, and ultimately society. Moreover, in the case of hydropower where benefits are socially acknowledged and valued, it is important to estimate decreases in non-use Energies 2019,12, 2986 9 of 18 values related to a dam’s construction and operation. Only then can a complete and socially equitable cost-benefit analysis be made. Worthy of note is the fact that all the studies identified and summarized above reveal non-negligible values for all the impacts under appraisal, providing strong evidence that despite lacking market prices, they do have economic value, and therefore cannot be ignored in proper comparison of benefits and costs for public decisions concerning dams’ construction and operations. 3. Perceptions of Impacts Underlying Non-Use Values by Population Subgroups: A Case Study 3.1. Non-Use Values and the Perception of Population Subgroups TEV includes components of use and non-use values, which can be elicited by economic valuation methods as illustrated by the selection in the previous section. Throughout this paper, we emphasize non-use values, which have no straightforward market, and yet should be carefully studied so that all costs and benefits of projects are accounted for. As mentioned, the elicitation of non-use values can be done through carefully designed questionnaires, and by creating hypothetical markets where survey respondents state their willingness-to-pay (WTP) for a marginal improvement or willingness-to-accept (WTA) a marginal decrease in a specific environmental good or service, as a consequence of a hydropower plant activity. These values are anthropocentric in that they stem from respondents’ utility for a use or non-use component of the good or service and only go as far as respondent’s perceptions and preferences allow. This restricts what is captured by the concept of TEV, and neglects, for example, negative impacts that are not known at the time the valuation occurs. On the other hand, how each respondent perceives the effects of a hydropower project, for example, will affect the valuation of the goods and services affected. Additionally, understanding the value of certain environmental goods or services as use or non-use can depend on certain characteristics of a population subgroup, such as for example being an angler or not, a tourist or not, or a local resident or not. Therefore, we can expect that different subgroups of the population will perceive differently the seriousness of the different dams’ impacts based on preferences, past interactions with the RES or being a user or non-user of the particular goods or services. This, in turn, will affect elicited values through stated preference methods. For the particular case where individuals can be perceived as users or non-users in relation to the hydropower plant impacts, special care should be taken when selecting the sample and designing the questionnaires. Measuring use and non-use values separately is theoretically questionable as it assumes separable utility functions, leading to embedding effects (part-whole or disaggregation bias) [ 85 , 86 ]. However, for the case where there are concerns over the equity of RES choices regarding location and size of power plants, it is not necessary to measure use and non-use values separately, but rather that the elicitation of welfare impacts is done for subgroups of the population, in particular between the users and non-users of the area where the dams are installed. In the case study we present in this paper, we explore perceptions of impacts of hydropower in different population subgroups and test the hypothesis that the perceptions are similar across different objective population characteristics. The alternative hypothesis is for previous experience and contact with the RES or being a user or non-user will condition perceptions. First, we test this hypothesis on data from local residents close to hydropower projects relative to national residents. Second, we can discern in the national sample more or less contact and familiarity with hydropower and split the sample and analyse differences in perceptions, namely across differences in installed capacity in the district of residence, whether individuals see a hydropower plant frequently or whether they have ever visited a dam. In both cases, the “further away” respondents are from hydropower projects, the more likely to perceive essentially non-use values of environmental and social attributes impacted, whereas respondents with more contact are more likely to include use values in their valuation. We expect stronger views on hydropower from local residents who live in the vicinity of power plants and thus are more directly affected by its adverse impacts. In fact, when stated preference Energies 2019,12, 2986 16 of 18 34. Hynes, S.; Hanley, N. Preservation versus development on Irish rivers: Whitewater kayaking and hydro-power in Ireland. Land Use Policy 2006,23, 170–180. 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