Economic Analysis of FERC Hydroelectric Licenses: examining license duration, value, and surrendering of licenses between 1990 and 2010

This paper analyzes the length, value, and likelihood of surrendered of Federal Energy Regulatory Commission (FERC) hydroelectric licenses, between the years 1990 and 2010. FERC issues licenses for dams in and is supposed to balance environmental, wildlife, recreational and economic concerns. Dam owners surrender their licenses for various reasons; some dams are never built for economic reasons and others are removed for environmental and economic reasons. This paper does not analyze the economics of any particular hydroelectric dam or dam removal, but instead provides estimations of the value and emissions reductions. These estimations include the value (past and future) of all 30 year licenses, the revenue gained through 2010 of all licenses, and the emissions resulting from surrendered licenses. Licenses for dams with smaller authorized capacities, which indicate low energy production, are more likely to be surrendered than dams with larger capacities. Licenses issued in recent years and in States with conservative political environments tend to be longer in duration. Finally, licenses are surrendered for site specific characteristics rather than recognizable trends