Preliminary environmental cost accounting for Olkaria IV geothermal project

Abstract

Environmental impact is one of the most significant considerations in the evaluation of economic development projects, yet it is a difficult factor to measure and to monetize. Regularly, decisions are made by governments on new development proposals that have significant economic and environmental implications, yet the economics of environmental impacts are frequently ignored. Decision-making in the areas of energy and environment calls increasingly for a better evaluation of the possible impacts of any envisaged policy and measure. In such decision-making, the benefits of geothermal energy are made explicit, while the ensuing environmental impacts are merely identified and qualitatively described. This paper underscores the importance of valuing and monetizing environmental impacts that are associated with the development of geothermal energy. A preliminary economic accounting of the common environmental impacts of Olkaria IV geothermal project was conducted. The results of this study recommend that a comprehensive economic valuation study be carried out on all the environmental impacts that are associated with the development of the larger Olkaria geothermal project.