Both in the United States and in Europe there is ongoing work on reversing habitat fragmentation and the attendant loss in biodiversity in river systems caused by hydropower and other developments. Fish ladders and other measures are being introduced to restore the connectivity in river systems. In this paper, we set up a theoretical model to investigate what the conditions are for such an investment to be socially profitable. We find that, even in cases where it would have been socially preferable not to build hydropower installations in the first place, connectivity-restoring measures affecting the installations are not necessarily socially beneficial. This is the case for a wide range of plausible assumptions about discount rates, investment costs and productivity losses.
Recommendations for Resource Managers:
Even in situations where it would have been socially preferable not to build hydropower plants in a river, carrying out measures now to reconnect different parts of the river and re-establish ecological connectivity may not be socially desirable.
Any economic analysis of the value of re-establishing ecological connectivity needs to consider the time lags involved until the river ecology is restored.
Reducing the time lags by actively resettling species does not necessarily improve the overall social profitability of reconnecting the different parts of the river.