PT  - JOURNAL ARTICLE
AU  - McDermott, Grant R.
AU  - Nilsen, Øivind A.
TI  - Electricity Prices, River Temperatures, and Cooling Water Scarcity
AID  - 10.3368/le.90.1.131
DP  - 2014 Feb 01
TA  - Land Economics
PG  - 131--148
VI  - 90
IP  - 1
4099  - http://le.uwpress.org/content/90/1/131.short
4100  - http://le.uwpress.org/content/90/1/131.full
SO  - Land Econ2014 Feb 01; 90
AB  - Thermal-based power stations rely on water for cooling purposes. These water sources may be subject to incidents of scarcity, environmental regulations, and competing economic concerns. This paper analyzes the effect of water scarcity and increased river temperatures on German electricity prices from 2002 to 2009. Having controlled for demand effects, the results indicate that the electricity price is significantly impacted by both a change in river temperatures and the relative abundance of river water. An implication is that future climate change will affect electricity prices not only through changes in demand, but also via increased water temperatures and scarcity. (JEL Q25, Q41)