Hydroelectric plants currently account for about 10 percent of U.S. electrical power capacity and are the cheapest and most reliable renewable energy source, but the high-head dams used to tap the power of falling water are criticized for destroying migratory fish and inundating wildlife habitat and historic sites under their huge reservoirs. Environmentalists are having success in blocking not only new hydroelectric construction, but the recommissioning and licensing of existing dams. Since hydroelectric is the only proven renewable option that has the capacity and the economics to compete substantially against non-renewables in the near future, shrinking hydro capacity is likely to reduce the overall share of renewable sources in power generation over the next decade. It is impossible to know, since there is no market in which people make such exchanges while paying the real cost of their choices. Hydroelectric plants are run as regulated monopolies, so the price for their electricity is determined more by politics than economics, as is the decision of whether to build a new dam.
Reservoirs have recreational value as well as helping to lower the cost of electricity.
Any time government brokers conflicting special interests fighting over a resource, the fight generates a great deal of heat, but sheds little light on the actual values people attach to the potential alternate uses of the resource. This isn't the case in a market where people reveal their preferences by putting their money where their mouth is or by economizing when they see that the monetary value their neighbor places on something is higher than they are willing to pay themselves. If riverbanks were privately owned, this type of market would quickly emerge. Ownership would tend to fall to the people who placed the highest monetary value on using the river, and the kind of use made would be determined by the public demand for and cost of the alternatives. An entrepreneur interested in making a profit from the purchase, would want to take into account the values of all these others.