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© 2022 The Authors Hydrology Research Vol 00 No 0, 1 doi: 10.2166/nh.2022.084

Sustainable planning of multipurpose hydropower reservoirs with environmental

impacts in a simulation–optimization framework

Amir Hatamkhania, Ali Moridi a, * and Timothy O. Randhir b

a
Civil, Water and Environmental Engineering Faculty, Shahid Beheshti University, Tehran, Iran
b
Department of Environmental Conservation, College of Natural Sciences, University of Massachusetts, Amherst, MA, USA
*Corresponding author. E-mail: a_moridi@sbu.ac.ir

AM, 0000-0002-3974-2170; TOR, 0000-0002-1084-9716

ABSTRACT

Hydropower projects involve enormous investments that require an efficient cost–benefit framework and optimization model for proper
development. Dams and hydropower plants have many impacts on the environment. These environmental impacts are often not included
in the economic calculations and planning of the projects, which leads to the loss of natural resources. The primary purpose of this research
is to incorporate environmental impacts into optimization and decision-making. A comprehensive simulation–optimization model is devel-
oped to optimize hydropower decisions. The positive and negative values of environmental impacts are incorporated into an economic
objective function under different scenarios, and optimal design was done for each scenario. The results show that considering environ-
mental economics affects the multipurpose hydropower project’s NPV and decision outcomes. Considering environmental impacts
compared to not considering them has reduced NPV of the project by 13.9%. The results emphasize the importance of including these
impacts to achieve sustainable development and management.

Key words: carbon sequestration, economic evaluation, environmental impacts, hydropower reservoir, simulation–optimization, sustainable
development

HIGHLIGHTS

• A comprehensive simulation–optimization model was used to solve the problem.

• Environmental impacts (EIs) are included in the hydropower project optimization problem.
• Two different methods (hydrological method and habitat condition of indicator species) are employed for environmental flow assessment.
• Considering EI is effective on decision variables and optimal energy production and agriculture development.

This is an Open Access article distributed under the terms of the Creative Commons Attribution Licence (CC BY 4.0), which permits copying, adaptation and
redistribution, provided the original work is properly cited (http://creativecommons.org/licenses/by/4.0/).

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GRAPHICAL ABSTRACT

1. INTRODUCTION
Economic evaluation is one of the most important decision criteria for the selectivity and prioritization of projects. Since
hydropower projects require huge investment, economic feasibility and optimal planning of dams and power plants are criti-
cal. Therefore, developing a comprehensive hydro-economic model is essential for technical and economic analysis and
optimal sizing of hydropower projects. Mathematical programming models, including simulation and optimization models,
are effective tools for achieving optimal water systems’ design and operation and are extensively used in analyzing hydro-
power projects. Bozorg Haddad et al. (2011) investigated a strategy for the optimal design, control, and operation of small
hydropower plants using the honey bee mating optimization algorithm. The objective function included the annual difference
between energy generation benefits, initial investment, and operation costs. The algorithm determined the annual benefit and
operating cost of generated energy. Hosnar & Kovac-kraj (2014) developed a model to optimize the construction of a hydro-
power plant to identify the maximum economic and profit from selling energy produced from the hydro system. Rahi et al.
(2012) used particle swarm optimization (PSO) to maximize the benefit to cost ratio of a hydropower plant. The analysis of
benefit–cost ratio was based upon direct costs, and revenue generated from indirect benefits have not been taken into con-
sideration. Yazdi & Moridi (2018) proposed a multi-objective optimization model for the estimation of design parameters
in cascade hydropower multipurpose reservoir systems. The main objectives considered in the optimization model included
minimizing the squared deviation of release from demands and maximizing the total amount of generated energy. Paseka
et al. (2018) presented an approach to the optimal design of a multipurpose reservoir that would provide water for down-
stream environmental demand, drinking and industrial water supply, agricultural water supply, and hydropower
production in the current conditions of climate uncertainty. The objective functions include minimizing the cost of dam con-
struction and maximizing benefits from water utilization for hydropower and water sales.

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Hatamkhani & Moridi (2019) used a simulation–optimization approach to solve optimal planning at the basin scale. The
objective functions of the problem were (1) maximizing the area under cultivation (AUC) of agricultural sectors and (2) max-
imizing the energy generated by the hydropower plant. Azizipour et al. (2021) employed the capabilities of the cellular
automata-based method to maximize the firm energy generation of multi-reservoir hydropower systems. Installed capacities
were selected as decision variables in the design phase and were determined in an iterative procedure. Ren et al. (2021) inves-
tigated the optimal management of water resources and its effect on optimal hydropower generation. They used a new version
of Developed Wildebeest Herd Optimization (DWHO) to forecast hydropower generation.
The optimal planning of hydropower projects in past studies is based on technical aspects like energy production or supply
deficits. Even economic objective functions are in a simplified form like the price of sale or marginal cost of energy, while
environmental impacts of hydropower are neglected. Hydropower is one of the most convenient renewable energy sources
and is growing quickly all over the world. Its fast deployment also has different environmental impacts that cannot be neglected.
Therefore, it is essential to consider the sustainability of hydropower projects so that this energy resource grows effectively.
These environmental impacts are also known as externalities. An externality is an inefficiency that appears when part of the
costs or benefits of an activity is external to the decision-maker’s calculations. In other words, part of the benefits or the
costs affects those who play no role in the decision (Zhang et al. 2015). Most of the previous studies focus on the estimation
of GHG emissions, so it is necessary to emphasize other environmental impacts (Nautiyal & Goel 2020). Hondo (2005),
Zhang et al. (2007), Varun et al. (2010), and Ferreira et al. (2016) are among the studies that investigated GHG emissions.
Gunawardena (2010) investigated the environmental externalities of a run of river project in Sri Lanka and estimated inequity
in the distribution of the impacts among various social groups. The impacts were assessed using different valuation approaches.
Finer & Jenkins (2012) examined the ecological impacts, in terms of forest loss and river connectivity, of the planned prolifer-
ation of hydropower dams among Andean tributaries of the Amazon River. The ecological impact analysis showed that 47% of
the potential new dams have a high impact, and just 19% have a low impact on the environment. Xia et al. (2020) presented a
framework for hydropower project externalities based on the Life Cycle Assessment and the economic valuation of hydropower
externalities. They applied this method in the assessment of the Three Gorges Project and the Xiluodu Project. Briones-Hidrovo
et al. (2019) argued that the assessment of hydropower impact on local ecosystems should be considered among conventional
hydropower costs. They employed, a cost–benefit analysis, based on an ecosystem services valuation approach.
The economic valuation of the environment makes it possible to compare environment protection and socio-economic devel-
opment to achieve sustainable use of scarce resources. This paper emphasizes the importance of assessing the impact of project
development on the environment in the planning phase. Most design processes include impacts as non-technical indicators
through environmental impact assessment studies (Stevovic et al. 2015). These studies are primarily descriptive texts that
have been done after completing all the technical design optimizations and have not always been included in the optimization
calculations. The primary purpose of this article is to provide the possibility of including environmental impacts in optimization
and decision making. Using an integrated approach and considering the technical, economic, and environmental aspects, a
hydro-economic model is presented to solve the problem of optimal development of hydropower projects and integrate optim-
ization problem and environmental impacts assessment of these projects. It should be noted that the environmental flow
requirement which is determined according to the habitat conditions of the indicator species and the Tennant method is con-
sidered as a constraint that must be satisfied in the optimization model without an economic perspective.
The alternative thermal plant method is used to estimate the benefits of the hydropower project based on the concept of
opportunity cost. Positive and negative environmental impacts are considered, along with the traditional costs and benefits
of the project to form the economic objective function of the problem. The decision variables include the normal water level
(NWL) of the reservoir (reservoir capacity), the installed capacity (IC) of the hydropower plant, and the AUC of the agricul-
tural development plan downstream of the reservoir. The WEAP (water evaluation and planning) model is employed for
simulation, and the PSO algorithm is used for optimization. The developed model is used for optimal planning and design
the Abriz reservoir in Iran, and the results are presented in different scenarios.

2. MATERIALS AND METHODS

2.1. Study area
The Maroon River Basin is part of the Persian Gulf Basin with an area of 25,349 square kilometers. It is limited to the
Karun River Basin from the west and north and the Zohreh River Basin from the east. Maroon Basin is located in Kohgiluyeh,

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Boyer-Ahmad, and Khuzestan provinces. Kohgiluyeh and Boyer-Ahmad provinces have a smaller basin area than Khuzestan
province with a share of about 20%. Figure 1 shows the map of the Maroon Basin in Iran and the location of dams and rivers.
The agriculture development plan covered by this study is located in Dehdasht and Charam regions in Kohgiluyeh and
Boyer-Ahmad provinces. Dehdasht and Charam are the only integrated plains of Kohgiluyeh and Boyer-Ahmad provinces
and comprise more than 30%. With its climate, soil, potential lands, and very favorable factors of agriculture, as well as
young people ready to work, this region is a suitable platform for the development and prosperity of agriculture if the required
water is provided. So, there is a need for a project to cover the significant demands of these two large cities of Kohgiluyeh and
Boyer-Ahmad provinces. Figure 2 shows a schematic of resources and demands in the Maroon River Basin.
The Abriz Dam site is located on the Maroon River. The most important goals of this project are to irrigate agricultural lands in
the region, supply the drinking and industry demands, and generate energy during peak times. The long-term average annual
inflow to the Abriz Dam is 659.2 million cubic meters (equivalent to 21 cubic meters per second). The average monthly distri-
bution of the long-term inflow of the Maroon River at the Abriz Dam site and monthly evaporation is shown in Figure 3.
Figure 4 shows the geometric relations of the reservoir.

2.2. Simulation–optimization approach (WEAP–PSO model)

In the optimal hydropower reservoir design and planning problem, the reservoir’s NWL, the AUC, and the IC are the main
decision variables that can take any values in their predefined continuous interval (Hatamkhani & Moridi 2022). Hence,

Figure 1 | Map of the Maroon Basin in Iran.

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Figure 2 | Schematic of resources and demands in the Maroon River Basin.

Figure 3 | Monthly inflow and evaporation at the Abriz reservoir.

many combinations of these variables will result in a specific value of performance and economic efficiency. To choose the
best combination, a systematic search or optimization algorithm can be used. So, in this research, a simulation–optimization
approach is employed. The flow diagram of the simulation–optimization model is shown in Figure 5. For the simulation of
water resources allocation, WEAP model is used. WEAP is distinguished by its integrated approach to simulating water
resources systems and policy orientation (Sieber & Purkey 2011). It provides a flexible, comprehensive, and user-friendly fra-
mework for policy analysis and is employed in many studies in recent years (Hatamkhani & Moridi 2021; Fanta et al. 2022).
Simulation of water resources allocation in the Maroon River Basin was performed using the WEAP model for 59 years with
monthly time steps. Despite many capabilities, there are some limitations to hydropower energy production modeling in

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Figure 4 | Elevation–volume–area curves for the Abriz reservoir.

Figure 5 | Flow diagram of the proposed simulation–optimization approach.

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WEAP. To improve these limitations, using the scripting environment of WEAP, a hydropower simulation module based on
the traditional sequential streamflow routing (SSR) method is employed to enable hydropower simulation (Hatamkhani et al.
2018). Then, the well-known optimization algorithm, PSO, is linked to the simulation model to solve the problem.
In the simulation–optimization process, first, the decision variables are generated by the PSO algorithm (coded in
MATLAB) and written in Excel. According to the amount of decision variables, project costs including traditional and
environmental costs are calculated. Then these variables are read by WEAP and the water resources simulation model is exe-
cuted. Water is allocated from the reservoir for downstream needs and the amount of allocation to each sector is calculated.
According to the water allocated to the hydropower and agricultural sectors, the economic benefits of the project are calcu-
lated. The environmental flow requirement is considered a hard constraint that must be satisfied in the optimization model
and is not included in the economic calculations. But supplying this requirement will affect the water available to other sec-
tors and, consequently, the benefits derived from them. Finally, according to the costs and benefits of the project, the objective
function (NPV of the project) is calculated. If the PSO stop criteria are met, the algorithm stops. Otherwise, the particle vel-
ocity and location are updated and new decision variables are generated. This process is repeated until the optimal solution is
obtained.
The values of the PSO parameters in this study are shown in Table 1. The appropriate parameter values have been obtained
based on previous studies by the authors (Hatamkhani et al. 2022a, 2022b).
The limits of decision variables are shown in Table 2.

2.3. Environmental flows assessment

Increasing water withdrawals from rivers are leading to serious degradation in river ecosystems. Water is allocated for
environmental demands so the river can achieve its natural functions. Environmental flows try to reach a balance between
the use of river water for economic development, human activities, and delivering proper ecosystem services ( Jain 2015). In
this research, environmental flow is estimated using hydrological methods and habitat conditions of indicator species.
The Tennant method developed by Tennant (1976) is one of the most used hydrological methods for determining environ-
mental flow worldwide and has been applied by at least 25 countries (Shaeri Karimi et al. 2012). This method is based on
empirical relationships among the defined percentage of the mean annual runoff and the prescribed ecological condition
of the river and aquatic habitat suitability. The Tennant method uses a percentage of the mean annual runoff for two different
6-month periods to determine conditions of flow related to wildlife, fishery, environmental resources, and recreational.

Table 1 | PSO parameters

Parameter Value

x 1
Wmax 0.9
Wmin 0.4
C1 1.8
C2 1.8
Swarm size 9
Particle size 3

Table 2 | Upper and lower bounds of decision variables

Decision variable Min Max

NWL (masl) 980 1,026

IC (MW) 10 80
AUC (Hectare) 15,000 30,000

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According to this method, 20% of the river flow regime in October to March and 40% of April to September is a good amount
for the minimum environmental flow.
One of the methods for estimating the environmental flow is the use of limnological studies. In this method, based on lim-
nological sampling and ecological studies of the region, the required depth for aquatic life and water-dependent species will
be determined, and then based on the required depths, the environmental flow will be estimated. Therefore, this method is
divided into two parts: the first part includes the selection of indicator species and their required depths, and the second part
is the determination of discharge corresponding to the depth. Indicator species are species that testify to the well-being
(health) of the entire ecosystem (Legendre 2013). Therefore, by determining and supplying their major ecological require-
ments, we can expect that the ecological requirements of other species that coexist with them, which usually have more
tolerance for human activities and change, can also be met (Wang et al. 2016; Fu et al. 2021). According to environmental
and field studies of the Abriz Dam (Iran Water Resources Management Company 2020), aquatic ecosystem animals including
Lutra lutra and Arabibarbus grypus fish are indicator species and the minimum water depth for the habitats of this species is
estimated 50 cm for March to June and 30 cm for other months.
Table 3 shows the environmental flow calculated by the Tennant and habitat condition of indicator species. The maximum
amount of these two methods in different months is considered the required environmental flow downstream of the
Abriz Dam.

3. COST–BENEFIT ANALYSIS
The various methods of economic evaluation are based on the correct calculation of costs and benefits. Trying to estimate the
costs and benefits of the projects accurately can have a tremendous impact on the quality of the economic evaluation and the
accuracy of the obtained economic indicators. In the cost–benefit analytical framework, all the costs and benefits of a project
are considered first. However, summarizing and comparing the costs and benefits of different years requires a series of com-
putational operations to synchronize. So, to calculate the net present value (NPV) of a project, all costs and benefits must be
based on a common year using the principles and techniques of economic engineering. The base year in this study is the
beginning of the project operation. The study period is considered 50 years. Figure 6 shows the components of the economic
analysis of hydropower projects which will be discussed further. Equation (1) is the objective function of the problem which
calculates the NPV of the project. PVC and PVB are the project’s present value of costs and benefits.

NPV ¼ PVB  PVC (1)

3.1. Project costs

Project costs include initial investment, maintenance, and operation costs. The project’s investment costs include the costs of
dams and related facilities, transmission systems, irrigation and drainage networks, and hydropower plant. All these costs are
a function of the problem decision variables, i.e. NWL (construction cost of dam and transmission system), AUC (irrigation
and drainage networks), and IC (hydropower plant). The following are the cost functions of each:

CCH ¼ f(NWL, AUC, IC) ¼ DCC þ TSC þ IDC þ HPC (2)

where DCC is the construction cost of dam, TSC is the transmission system, IDC is the irrigation and drainage networks cost,
HPC is the hydropower plant cost, and CCH is the total initial investment cost of the hydropower dam and power plant.

Table 3 | Environmental flow downstream of the Abriz Dam (CMS)

Month Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sep Annual

Tennant method (CMS) 2.21 2.43 3.44 3.78 4.01 5.27 4.66 3.46 3.59 3.53 2.68 2.24 3.43
Habitat condition method (CMS) 2.1 2.1 2.1 2.1 2.1 5.7 5.7 5.7 5.7 2.1 2.1 2.1 3.3
Environmental flow (CMS) 2.21 2.43 3.44 3.78 4.01 5.7 5.7 5.7 5.7 3.53 2.68 2.24 3.93

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Figure 6 | Economic analysis of the hydropower project.

Operation and maintenance costs (COMH ) are calculated on an annual basis from the beginning of the operation period to
the end of the operation period. COMH is calculated using the following equation:

COMH ¼ 0:06 DCC þ 0:01(TSC þ IDC þ HPC) (3)

So, the project’s present value of costs (PVC) can be calculated as below:

    
F P
PVC ¼ S CCH,p  , i, p þ COMH  , i, n (4)
P A

where P is the present value, F is the future value, A is the annual value, i is the interest rate, COMH is operation and main-
tenance costs, PVC is the present value of project cost, n is the number of time periods, and CCH,p is the capital cost in p
years before operation.

3.2. Project benefits

3.2.1. Hydropower benefits using the alternative thermal plant method
An alternative thermal plant method is used to calculate and analyze the benefits of the hydropower project. This method is
developed based on the concept of opportunity cost. Opportunity costs represent the potential benefits an individual, inves-
tor, or business misses when choosing one alternative over another. If the hydropower plant was not built, a thermal power
plant would be constructed instead to supply equivalent energy production. So, the benefits of a hydropower plant are equal

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to the costs of its alternative thermal power plant. In this method, we have to identify all of the costs associated with the ther-
mal plant and divide them into the fixed cost (capacity cost) and variable cost (energy cost) categories (US Army Corps 1984;
Raeisi et al. 2016; Hatamkhani & Alizadeh 2018). The present value of costs can be calculated as follows:

    
F P
PVCTPP ¼ S CCT,p  , i, p þ {COMF þ CFu þ COMV }  , i, m (5)
P A

PVCTPP is the present value of thermal plant costs, COMF is the fixed operation and maintenance costs, CFu is the fuel cost,
COMV is the variable operation and maintenance costs, p is the years of construction of thermal plant, and m is the useful life
of thermal plant. Some of the above variables can be defined as the following equations:

CCT,p ¼ S(ap  ICTPP  PC )

(6)
p ¼ P, (P  1), . . . , 1, 0

FE
ICTPP ¼ (7)
n hours  PF  TMA
COMF ¼ POMF  ICTPP (8)
CFu ¼ CFu, FE þ CFu, SE (9)
PFu,FE  FE
CFu, FE ¼ (10)
HVFE  RFE
PFu,SE  SE
CFu, SE ¼ (11)
HVSE  RSE
COMV ¼ COMV,FE þ COMV,SE (12)

COMV ¼ POMV,FE  FE þ POMV,SE  SE (13)

In these relations, p is the duration of the construction of the thermal plant, ap is the percentage of cost spent in year p
before the start of the operation, ICTPP is the installed capacity of the alternative thermal plant in megawatt, PC is the cost of
construction per unit of capacity, FE is firm energy produced by hydropower plant, SE is secondary energy produced by
hydropower plant, n hours is the number of hours per year, PF is the thermal plant factor, POMF is the fixed operation and
maintenance cost per unit of capacity, POMV is the variable operation and maintenance cost per unit of energy generation,
TMA is thermal plant availability, CFu is fuel costs, PFu is the cost per unit of thermal plant fuel, HV is the heating value
of fuel, and R is the thermal plant efficiency.
Hence, the benefits of a hydropower plant are equal to the costs of its alternative thermal power plant, PVB of a hydro-
power plant is:

PVBHPP ¼ PVCTPP (14)

In Iran, the costs of thermal power plants are calculated based on technical and economic information of power plants
(TAVANIR 2005). That is illustrated in Table 4. Given that Abriz hydropower plant is a peak generation plant, gas turbine
is selected as an alternative. Also, it is assumed that the combined cycle plant with greater efficiency and lower variable
costs is used for the replacement of secondary energy. The heating value of natural gas 8,600 kcal per cubic meter and
diesel 9,232 kcal per liter are considered. For 3 months of the year due to the limited supply of natural gas for thermal
power plants, diesel as an alternative fuel is used. The price of natural gas is 31,247 Rials per cubic meter and the price of
diesel is 62,494 Rials per liter. The exchange rate used to estimate the benefits and costs of the project is 156,234 Rials
per dollar and 171,562 Rials per euro.

3.2.2. Agriculture benefits

In studies of water resources development projects aimed at agriculture, the benefit of the project is estimated by the differ-
ence between the benefit in the condition with and without the project. The total gross agricultural land area in the future

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Table 4 | Technical and economic information of thermal power plants

Energy value
Capacity value (without fuel cost)

Variable o&m
Fix o&m
Construction cost CC OMV
Thermal plant OMF
Construction time Life availability (percent) Efficiency Euros/ Euros/ Rials/
Type of power plant (year) P (year) TMA (percent) R kW Rials/kW Rials/kW kWh kWh

Combustion (gas) 2 12 83 33.4 290.00 4,222,926 49,345 0.06 2.60

turbine
Steam plant 5 30 72 41.2 677.00 7,905,080 180,594 0.02 5.56
Combined cycle 5 30 81 50 519.00 7,208,129 83,578 0.03 2.99

without the project is 20,000 hectares. Based on agricultural economics studies (Iran Water Resources Management Com-
pany 2020), the net value of production per hectare of agriculture without the project is estimated at 44 million rials. The
net production value per hectare of agricultural lands in the future conditions with the project is estimated at 237 million
rials. Therefore, the net benefit from agriculture is calculated from the difference in income in the conditions with and with-
out the project. Agricultural benefits are calculated according to Equation 15.

 
P
PVBAgr ¼ ((AUCFPV)  880) , i, n (15)
A

where PVBAgr is the present value of agriculture benefit, AUC is the area under cultivation, and FPV is the value per hectare
of agricultural lands.
It should be noted that the monthly allowable deficit in supplying the agriculture demand (WDAgr ) is equal to 15%. There-
fore, the area under agriculture should be estimated so that the amount of deficit is not more than 15%. For this purpose, in
the situation where agricultural demands are not well supplied, a penalty function was considered to determine the AUC
according to this constraint:

if WDAgr . 15 then
(16)
AUC ¼ AUC  (WDAgr  15)PE AUC

where PE is the value of the penalty coefficient.

Finally, the project’s total benefits are estimated based on the sum of agriculture and hydropower benefit.

PVB ¼ PVBHPP þ PVBAgr (17)

3.3. Economic evaluation of environmental impacts

3.3.1. Positive impacts
Electricity generation using thermal plants causes substantial human health and environmental damages, which requires a
cost to eliminate this pollution or compensate for the damages caused by it. Since hydropower plants do not use fossil
fuels. As a result, they do not face environmental pollution caused by fossil fuels and it can be considered an advantage
for hydropower plants.
Asian Development Bank (1996) introduced the ‘adjusted conversion’ method to adjust environmental costs commensu-
rate with each of the pollutants from electricity generation. This method is proposed to calculate the appropriate
adjustment index using GDPppp per capita (based on purchasing power parity). After multiplying this index by environ-
mental costs per ton of pollutants of the country of origin, environmental costs are calculated per ton of pollutants in the
country under the study. In this research, the method proposed by the Asian Development Bank is used to calculate the
environmental costs of thermal power plants (gas turbine, combined cycle, and steam plant). Thus, the environmental

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costs of each kilowatt-hour of electrical energy of thermal power plants (Rials/kilowatt-hour) were obtained (World Bank
Group 2002), and the results of which are summarized in Table 5.
This cost must be included in economic analysis and added to other thermal plant costs. Damage costs. of emitting pollu-
tants and greenhouse gases (EPG) can be calculated as below:

EPG ¼ PFE  FE þ PSE  SE (18)

where PFE is the average external costs per unit of energy produced in a thermal power plant for replacing firm energy and PSE
is the average external costs per unit of energy produced in a thermal power plant for replacing secondary energy.

3.3.2. Negative impacts

The environmental damage costs caused by the negative impacts of the project must be added to the rest of the costs to cal-
culate the total cost. Figure 5 summarizes the costs of the project. The environmental costs calculation method is presented in
the following paragraphs.

3.3.2.1. Damage to the forest habitat. One of the activities affecting the natural environment in the project’s construction
phase is the cleaning of the vegetation in the reservoir area. The habitat value of lost trees and shrubs such as oak and
astragalus is considered as one of the project costs. A typographic vegetation map was prepared in the dam and power
plant area based on the field visits carried out in the project area. According to the rate of uprooting and eradication
penalty for each tree type (Table 1), the total amount of damage caused by cutting tree and shrub cover in the reservoir
area of the Abriz Dam at different normal water levels is presented in Table 6.
Therefore, the habitat damage cost caused by cutting down trees in the reservoir area (HVD) is calculated using the follow-
ing equation:

HVD ¼ 9:5NWL–9,193 (19)

3.3.2.2. Carbon sequestration. Carbon sequestration is another important vegetation service. Absorbing carbon dioxide from
the air and storing it in plants or soil leads to air purification and reducing greenhouse gases in the atmosphere. The amount

Table 5 | Environmental costs of thermal power plants energy generation (Rials/kilowatt-hour)

Plant owner Type of power plant Environmental costs (Rials/kWh)

Ministry of Energy Combustion turbine 1,735.8

Steam plant 11.62.8
Combined cycle 2,322.8
Private Sector Combustion turbine 1,553.4
Steam plant 1,218.5
Combined cycle 4,816.8

Table 6 | Damage to the forest habitat at different NWLs

Habitat value of trees and shrubs within the reservoir area (million rials)

NWL Oak Pistachio Almond Astragalus Myrtus Total damage (billion rials)

1,026 271,058 165,525 64,050 57,000 6,000 563

1,018 231,053 141,000 53,925 37,350 6,000 469
1,010 196,980 120,300 45,300 24,675 6,000 393
1,002 168,525 103,050 38,175 19,125 6,000 335

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of carbon sequestration in each species varies according to the type of species. Vegetative shape, stem diameter, canopy size,
leaf area, root system, environmental edaphic factors, etc., are among the factors affecting the amount of carbon sequestration
by a species (Motamedi et al. 2020).
Vegetation clearance in the reservoir area leads to the extinction of significant species such as oak, pistachio, almond, and
astragalus. For this reason, the amount of carbon stored at different levels in the dam area was calculated and is presented in
Table 7.
Therefore, the damage function caused by the loss of carbon sequestration (CSD) is as follows.

CSD ¼ 1:4375NWL  1403:9 (20)

4. RESULTS AND DISCUSSION

To solve the optimal design of the hydropower project, the developed simulation–optimization (PSO–WEAP) model is
employed. In the simulation–optimization model, four scenarios were examined based on how the environmental costs
and benefits of the project are considered in the objective function. These four scenarios are presented in Table 8.
Figure 7 shows the process of convergence of particles toward the optimal solution and the best objective function based on
different values of decision variables in the base scenario (scenario 1: without considering the environmental impacts) and
the most complete scenario (scenario 4: considering all environmental impacts). As can be seen, the objective function starts
from very large negative values at the beginning of the optimization process, meaning that the project costs are greater than
the benefits. Eventually, the value of the objective function converged and reached its final value.
Figure 8 shows the convergence process of the decision variables in scenarios 1 and 4. As it is clear from Figures 7 and 8,
both the objective function and the decision variables in scenario 4 have converged to the optimal value in higher iterations.
This is because the objective function is more complex in scenario 4, and the environmental terms are also added to the objec-
tive function.
Table 9 summarizes the results of the simulation–optimization model in four scenarios. The first thing that is clear from the
results is the maximum value of the NWL (reservoir capacity) in scenarios 1 and 2. In these two scenarios, the negative
environmental impacts of the project are not considered. As NWL increases, the growth trend of benefits seems to outweigh
the costs of the project. Due to technical limitations, the NWL value is set to maximum, and in the absence of these restric-
tions, the value may be higher. Considering the positive effects of the hydropower reservoir (scenario 2), the amount of NPV

Table 7 | Damage due to lack of carbon sequestration at different NWLs

Carbon sequestration (ton) by species in the reservoir

area
Total carbon sequestration Total annual damage due to lack of carbon
NWL Oak Pistacia Almond Astragalus for all species (ton) sequestration (billion Rials)

1,026 5,287 6,180 3,780 29 1,527.6 67

1,018 5,423 5,388 3,295 25 1,413.1 62
1,010 4,957 4,690 2,869 22 1,253.8 55
1,002 456 4,120 2,520 19 711.5 31

Table 8 | Description of scenarios

Scenarios Description

Scenario 1 Costs and benefits of the project without considering the environmental impacts
Scenario 2 Costs and benefits of the project with considering the positive environmental impacts
Scenario 3 Costs and benefits of the project with considering the negative environmental impacts
Scenario 4 Costs and benefits of the project with considering all environmental impacts

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Figure 7 | Convergence of objective function.

of the project has increased to 2,035 billion rials (about 9%) compared with scenario 1. Considering the positive impacts and
the effect it has on the objective function also affected the amount of decision variables. Since the project’s positive impacts
are applied to the generated energy, it has increased the IC and, as a result, the energy produced by the power plant. In scen-
ario 2, the total generated energy of the power plant has increased by 5.25 GWh (3.5%) compared with scenario 1. However,
the increase in IC has had a significant impact on firm energy generation, increasing by 14.5% (from 56.95 to 65.2 GWh). On
the other hand, because more water is allocated for energy production, the amount of cultivated area has decreased.
In reviewing scenarios 3 and 4 (negative impacts are considered), the first thing that is clear is the significant decrease in
NPV compared with scenarios 1 and 2. Therefore, the type of environmental impact consideration can make a 34% difference
in the NPV of the project (scenario 2 compared with scenario 3). In scenario 4, where all environmental impacts are con-
sidered in economic valuation, compared with scenario 1, the NPV of the project is reduced by 3,161.43 billion rials. This
indicates that the negative impacts have a more significant effect on the NPV of the project than the positive. With the
addition of negative impacts in scenarios 3 and 4, the NWL decreases and is no longer at its maximum value. This can be
justified given that the changes in negative impacts were a function of the NWL of the reservoir.
With the decrease of NWL, the amount of area under agricultural cultivation has decreased. The reason for this is the lack
of adequate supply of agricultural needs due to the reduction of reservoir storage capacity. Given that the maximum deficit of
agricultural demand is 15%, the AUC is estimated to meet this constraint. On the other hand, negative impacts influenced the
decision variable of IC and the amount of energy production. For comparison, the energy produced in scenario 2 was 154.8,
which in scenario 3 reached 142.6. This means that the energy generated by the power plant is reduced by 9.2%. This is due to
both the reduction of the NWL (reduction of the net head and flow through the power plant) and the reduction of the IC of
the power plant, which is calculated 6 MW smaller. In scenario 4, with the addition of the positive environmental impacts of
the project, the values of the decision variables have improved compared with scenario 3. Increasing the NWL and IC has led
to an improvement in the AUC and energy generation.
In the optimal solution, the agricultural and environmental demands downstream of the Abriz reservoir is also well sup-
plied. Figure 9 shows the agricultural requirement (which is a function of the AUC) and the average supply delivered in
different months of the simulation period.
According to Figure 9, the highest deficit in meeting the agricultural demand happened in September and October. How-
ever, it should be noted that the amount of AUC in the optimization model is determined in such a way that the unmet
requirement is less than 15% (according to Equation (16)). To clarify, the coverage of the demand (percent of requirement
met) is shown in Table 3. As can be seen, the lowest coverage is for October with 85.8%. Also, the optimization model per-
forms well in supplying the environmental flow, which is considered a hard constraint, and according to Table 10, the lowest
amount of coverage occurred in December which is only 1.7%.

5. CONCLUSION
One of the most critical environmental problems today is the lack of environmental considerations in macro-policies and pro-
grams. The main reason for this is the lack of an economic valuation system for environmental resources and its non-inclusion

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Figure 8 | Convergence process of the decision variables: (a) storage capacity, (b) installed capacity, (c) area under cultivation.

in the economic evaluation of hydropower projects. Investment at the macroeconomic planning level usually leads to sectors
with a major GDP share. The result is a weakening of environmental resources. This study aimed to present a constructive
approach to solving the problem discussed and ensuring sustainability. Therefore, we consider some of the project’s environ-
mental impacts in the cost–benefit framework and solve the problem of optimal design and planning of a hydropower
reservoir. For this purpose, an optimization–simulation approach was presented using the link between a water allocation
simulation model (WEAP) and an optimization algorithm (PSO). The developed model was applied to the Abriz hydropower

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Table 9 | Simulation–optimization (WEAP–PSO) results

Scenarios S1 S2 S3 S4

NWL (masl) 1,026 1,026 1,024.17 1,024.96

IC (MW) 30.84 33.45 27.44 29.83
AUC (Hectare) 19,399.38 19,259.36 19,139.60 19,190.06
NPV (Billion Rials) 22,703.55 24,737.95 17,864.34 19,542.12
Energy generation (GWh) 149.55 154.8 142.6 146.45
Firm energy (GWh) 56.95 65.2 52.8 55.07

Figure 9 | Agriculture demand requirement and supply delivered in different months.

Table 10 | Agriculture demand and environmental flow coverage

Demand site coverage Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Agriculture (Percent) 85.88 89.38 91.00 100.00 96.61 96.04 98.18 96.98 93.99 94.14 90.60 88.25
Environmental flow (Percent) 100.00 99.78 98.27 99.21 99.54 99.98 100.00 100.00 99.52 100.00 100.00 100.00

reservoir in the Maroon Basin in Iran. The decision variables of the problem include the NWL of the reservoir, IC of the
hydropower plant, and the cultivated area of agricultural development downstream of the reservoir.
According to the way of considering costs and benefits of the project in calculating the economic objective function, four
scenarios were defined and the optimization results for these four scenarios were presented. According to the results, it is
clear that considering the environmental economics of the project has a significant effect on the results of optimization,
including the objective function and decision variables. According to the results, the economic effect of the negative environ-
mental impacts of the project was more significant than its positive impacts. Considering environmental impacts compared
with not considering them has reduced the NPV of the project by 13.9%. Also, the AUC and energy production has decreased
by 209.32 hectares and 3.1 GWh, respectively.
The results show that the inclusion of environmental considerations in the economic analysis of the hydropower reservoir
affects the development and planning of the project, and these impacts must be considered along with other economic and

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social planning. Considering the environmental impacts prevents the overestimation of design variables and gives us a more
realistic picture of the project’s benefits and costs. Using the integrated simulation–optimization approach, optimal planning
can be determined so that negative impacts are minimized and positive impacts are maximized, which leads to more move-
ment toward sustainable development. In this research, the optimal development planning of a multipurpose hydropower
dam has been investigated, it should be noted that the other services of the reservoir such as flood management or rec-
reational activities can be considered in the cost–benefit analysis. Also, in addition to environmental impacts considered
in this research, other impacts such as preventing soil erosion in the forest area can be included in the economic optimization
of the projects.

FUNDING
The authors declare that no funds, grants, or other support were received during the preparation of this manuscript.

CONSENT TO PARTICIPATE
All authors consent to participate.

CONSENT TO PUBLISH
All authors consent to publish.

DATA AVAILABILITY STATEMENT

Data cannot be made publicly available; readers should contact the corresponding author for details.

CONFLICT OF INTEREST
The authors declare there is no conflict.

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First received 29 July 2022; accepted in revised form 9 December 2022. Available online 30 December 2022

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