Debates over the scope of environmental impact, life-cycle, and cost-benefit analysis frequently revolve around disagreements on the causal structure of complex sociotechnical systems. Environmental advocates in the United States have claimed that new electrical interties with Canada increase development of Canadian hydroelectric resources, leading to environmental and health impacts associated with new reservoirs. Assertions of such second-order impacts of two recently proposed 9.5 TWh year-1 transborder transmission projects played a role in their suspension. We demonstrate via Bayesian network modeling that development of Canadian hydroelectric resources is stimulated by price signals and domestic demand rather than increased export capacity per se. However, hydropower exports are increasingly arranged via long-term power purchase agreements that may promote new generation in a way that is not easily modeled with publicly available data. Overall, this work suggests lesser consideration of generation-side impacts in permitting transborder transmission infrastructure while highlighting the need for higher resolution data to model the Quebec-New England-New York energy system at the project scale. More broadly, Bayesian analysis can be used to elucidate causal drivers in evolving sociotechnical systems to develop consensus for the scope of impacts to consider in environmental impact, life cycle, and cost-benefit analysis. Keywords Hydroelectricity, Environmental Impacts, Transborder Electricity Transmission, Energy Policy, Causal Inference, Decarbonization, Cost Benefit Analysis. 2 1. Introduction Quebec, Canada has 41 GW of installed hydropower generation accounting for 94% of all electrical generation in the province (Canada Energy Regulator, 2024a). These resources are a large and generally growing source of electricity for the northeastern United States: net exports to the U.S. averaged 22.5 TW·h year-1 between 2018-2023, compared to 11.9 TW·h year-1 between 1998-2003, and accounted for roughly half of Canada’s net electricity exports to the U.S. in that period (Canada Energy Regulator, 2024b). Energy systems models find that increased intertie capacity with Canada generally lowers overall costs of decarbonization in the United States, with Canadian hydropower either buffering intermittent supply of U.S. wind and solar or supplying base load (Dimanchev et al. 2021, Calder et al. 2022). Newly proposed transmission projects have however generated considerable controversy, with three ~1GW corridors through New England having been cancelled or suspended in 2018, 2021, and 2024 (Appeal of Northern Pass Transmission, LLC & a., 2019; NECEC Transmission LLC et al. V. Bureau of Parks and Lands et al., 2022; Dalton, 2024; Gronendyke, 2018; Maine Department of Environmental Protection, 2021; U.S. Department of Energy, 2017). Legal, political, and social opposition to these projects has been animated by concerns over environmental and health impacts associated with the transmission infrastructure itself and with the large reservoirs that supply hydroelectricity (Appalachian MTN Club, 2018; Forest Society, n.d.; Natural Resources Council of Maine, 2018; Peggy Kurtz et al., 2018; Riverkeeper, n.d.). This is consistent with the experience of the United States more broadly, wherein renewable energy projects are frequently challenged on the adequacy of environmental impact assessments (EIAs) mandated by the National Environmental Policy Act (NEPA) and/or by state-level analogues. Such challenges accounted for 643 out of 2124 lawsuits across 31 categories inventoried by the U.S. Climate Change Litigation database as of November 2023 (Sabin Center for Climate Change Law, 2023). The land-use needs of renewable energies suggest that EIA will play an increasing role in debates over decarbonization decisions. For example, Lovering et al. (2022) calculate future global land use requirements of roughly 207 Mha by 2050 to achieve the International Energy Agency’s 2ºC warming scenario compared to 97 Mha in 2017, not counting land required for transmission infrastructure. NEPA requires evaluation of “reasonably foreseeable” environmental consequences with a “reasonably close” causal link to a federal action (e.g., permit issuance) even if these consequences fall outside the U.S., and even if they are second-order or indirect effects (Border Power Plant Working Group v. Department of Energy, 2003; Council on Environmental Quality, 2021). Recent updates to the regulations governing NEPA implementation reaffirm that relevant impacts may occur at a different time or place than the covered action while clarifying that simple “but-for” causation is generally an insufficient standard (Council on Environmental Quality, 2020). Executive agencies generally have broad discretion and latitude to apply their own judgments in scoping and interpreting EIA, even while their actions and findings under NEPA can be (and frequently are) reviewed by the courts (Colburn, 2016). Disagreements over the required scope of EIA for transborder transmission projects have highlighted the need for methods to objectively assess the range of impacts to which they are 3 causally connected. Opposition has been animated by (among other factors) the claim that increased transborder transmission will lead to expanded generation in Canada, exacerbating diverse impacts such as greenhouse gas emissions from reservoirs and accumulation of methylmercury in the traditional foods of Indigenous communities (Calder et al., 2016; Rosenberg et al., 1997). Legal filings have cast generation-side environmental and health impacts of reservoirs as second-order consequences of transborder transmission projects that must be included in the scope of EIAs mandated by NEPA (Birchard, 2017). More broadly, life cycle assessment and cost-benefit analysis methodologies are subject to subjective judgments as to the causal network to overlay on complex, evolving socio-technical systems and may be improved by transparent methodologies for causal attribution. For example, “attributional” assessment (Ekvall, 2019), whereby a fraction of the life cycle emissions of existing reservoirs is assigned to energy imported over new electrical interties, is common, even among prospective cost-benefit analyses (New York State Energy Research and Development Authority, 2021). We have previously argued that this has the effect of underestimating net benefits from incremental expansion in transmission when these projects have no causal connection to new reservoir development (Calder et al., 2022). Indeed, a “consequentialist” perspective, whereby alternative interventions are compared in terms of the impacts causally connected to each candidate intervention, is better suited to decision support but rarely used in energy systems analysis due in part to difficulties in causal analysis (Curran et al., 2005). There is increasing interest in the application of statistical causal inference tools to scope the range of environmental impacts attributable to biophysical perturbations (Arif & MacNeil, 2022; Paul, 2011). We have not however identified any research that examines how these methods may elucidate impacts mediated through complex social or economic systems, such as the renewable energy transition. Indeed, impacts mediated through social systems, i.e., those which are conditional on an unknown future individual or social response, are virtually never addressed in EIA due to a lack of integrated modeling capacity or efforts by project proponents to limit EIA scope. This includes results of economic phenomena such as the “rebound effect”, where projects improving efficiency accelerate rather than arrest depletion of natural resources or environmental degradation (Owens et al., 2022), and market actions of electricity suppliers following projects that increase transmission capacity, which is the focus of the present analysis (Border Power Plant Working Group v. Department of Energy, 2003). Here, we conceptualize the Quebec–New England–New York electricity market as generation, demand, transmission, and price phenomena connected via a causal network with uncertain structure. We develop a rich dataset covering the period 1979 to 2021, which we use to evaluate the plausibility of alternative causal structures represented by Bayesian networks (BNs). BNs are directed acyclic graphs (DAGs) used to evaluate the evidential support for the presence and directionality of causation among system variables (Hernan & Robins, 2023; Nogueira et al., 2022; Pearl, 1995, 2000; Spirtes et al., 2001; Su et al., 2013). Specifically, we interrogate the claim that transborder transmission infrastructure stimulates hydroelectric development in Canada. As described above, this claim has been the basis for legal filings arguing that DOE is required to consider generation-side environmental impacts in permitting transmission infrastructure and has contributed to opposition to these projects. We also characterize evidence 4 for other asserted or hypothesized causal relations in this system and identify challenges inherent in the use of causal inference methodologies for complex sociotechnical systems more broadly. 2. Methods 2.1. Study area Quebec, Canada has 37,590 MW of installed hydroelectric capacity (plus an exclusive power purchase agreement for 5,428 MW of generation at Churchill Falls in Labrador), accounting for 91% of total generation (Hydro-Québec, 2022a). Quebec shares a border with the U.S. states of Maine, New Hampshire, New York, and Vermont and is a major exporter of electricity through interties with the latter three states. Development of large (>245 MW) hydroelectric facilities began with La Tuque (entry into service in 1955) and has continued to present day with Romaine-4 (2022). Locations of existing interties and large generation facilities are plotted in Figure 1. The U.S. accounts for the large majority (i.e., >70% over 2018-2023) (Canada Energy Regulator, 2024a; Hydro-Québec, 2018–2023) of net exports from Quebec and is the site of the most significant controversy regarding transmission infrastructure and is thus the focus of our analysis. The six states of New England share a common transmission system operator, ISO New England, though each state has different renewable energy targets and has historically managed renewable energy procurements individually. The electrical grid in New York is managed by ISO New York. We refer to New England and New York collectively as the northeastern United States (NE USA). Historically, surplus generation from Quebec has been sold on the short-term spot market to neighboring states and provinces (i.e., 90% of exports between 2014-19). However, recently, longer-term export contracts tied to large purpose-built infrastructure have been pursued. This Figure 1: Large (>245 MW) generation and transborder transmission infrastructure in Quebec, Canada including Churchill Falls in Labrador due to exclusive power purchase agreement. New York (NY), New England states Connecticut (CT), Massachusetts (MA), Maine (ME), New Hampshire (NH), Rhode Island (RI), and Vermont (VT), and Quebec, Canada, are highlighted. Years of entry into service and installed capacity from Hydro-Québec (2023). Locations of infrastructure from Hydro-Québec (2020). Intertie locations represent 4300 MW capacity expansion projects undertaken since 1979. 5 includes a 10.4 TWh year-1 (1.3 GW) corridor through New York recently completed, two 9.5 TWh year-1 (~1 GW) corridors to Massachusetts via New Hampshire (cancelled) and Maine (suspended), and a ~1 GW corridor through Vermont and New Hampshire (cancelled) (Appeal of Northern Pass Transmission, LLC & a., 2019; Dalton, 2024; Gronendyke, 2018; Maine Department of Environmental Protection, 2021; NECEC Transmission LLC et al. V. Bureau of Parks and Lands et al., 2022; U.S. Department of Energy, 2017). Electricity trade between Quebec and Ontario display a balanced bilateral trade pattern that follows a seasonal cycle. Ontario's exports during the winter in Quebec help improve reliability and meet high electricity demands. In contrast, in the summer, there is a rise in exports from Quebec to Ontario due to the high demand for air conditioning (Independent Electricity System Operator, n.d.). 2.2. Model conceptualization We developed a conceptual model for generation, demand, transmission, and price variables, representing assumed and disputed causal connections in the Quebec and NE USA electricity markets (Figure 2). Installed hydropower generation capacity is a function of current and projected demand and factors of safety to reflect uncertainties in future generation (governed by hydrologic conditions) and demand (Stedinger et al., 1984; U.S. Department of Energy, 2016). High-consequence dams require higher factors of safety for such uncertainties, increasing the probability of overdesign (Fell et al., 2005; Herza et al., 2018). Exports are meanwhile determined by generation capacity, price signals resulting from the balance of supply and demand domestically and in export markets, and the capacity of available transmission infrastructure. Investments are necessary for increases in both installed generation and transmission. To our knowledge, these basic dynamics are not in debate and we have represented them as “asserted relationships” in Figure 2. Development of transborder transmission capacity stimulated by U.S. electricity demand may accelerate the development of Canadian hydroelectric resources by enhancing opportunities for export. Historically, higher prices for Figure 2: Conceptual diagram showing asserted and hypothesized relationships between generation, transmission, and demand variables in New York/New England (NE USA) and Quebec, Canada. Investments are a subset of revenues (omitted). Asserted and hypothesized relationships are described in the text. System variables are shaded red for Quebec, blue for the NE USA, and red/blue for transborder. 6 electricity in the U.S. than in Canada have played a major role in the pursuit of export opportunities by Canadian utilities (Warner & Coppinger, 1999). These export opportunities continue to be acknowledged in decision-making around new projects, for example, coupling the Maritime Link transmission project with the 824-MW Muskrat Falls hydroelectric project in Newfoundland & Labrador, developed in the 2010s (Government of Newfoundland and Labrador, 2012). Meanwhile, public statements by Hydro-Québec, the government-owned utility that manages electrical generation and distribution in Quebec, Canada, suggest that the export market is necessary for profitability (Snyder, 2018). However, it is not clear that investments in transmission infrastructure decisions are themselves stimulating new generation beyond key drivers such as domestic demand and the export opportunities allowed by existing transmission. It is therefore not understood if, in the context of proposed transmission projects, potential new generation (and its associated environmental and social effects) can be construed as second-order consequences within the meaning of environmental impact, life cycle, or cost benefit analysis. Likewise, it is not clear how opposition to transborder transmission infrastructure affects the viability of new generation projects in Canada. While capacity expansion models can simulate the economics of new hydroelectric generation under different transborder transmission scenarios, currently available tools do not have the resolution to allow for simulations conditioned on individual projects (Calder et al. in prep). Therefore, we apply causal inference to available data to better understand these questions. The claim that increased transborder infrastructure leads to increased generating capacity in Canada is the central focus of this analysis and is represented as Hypothesis # 1 in Figure 2. An affirmative finding would support the argument that generation-side impacts are “reasonably foreseeable” consequences of transmission infrastructure and hence reviewable under environmental impact assessments mandated by NEPA for federal permitting as previously argued to DOE (Birchard, 2017). Conversely, a negative (or null) finding may increase support among stakeholders who currently oppose transmission infrastructure on the basis of a supposed stimulating effect on generation (Webster, 2022). Beyond this central question, we evaluate other, non-mutually-exclusive relationships. Relationship # 2 holds that installed hydroelectric capacity is instead stimulated by the price difference between Quebec and the northeastern U.S. Other relationships evaluated represent potential drivers of transborder intertie capacity: Relationship # 3 hypothesizes that intertie capacity is stimulated by the same price difference, and Relationship # 4 hypothesizes that intertie capacity is stimulated by U.S. demand. These alternative hypotheses have fewer immediate implications for environmental impact assessment but may provide an alternative causal framework by which to understand the temporal evolution of this system. 2.3. Variable definition and data aggregation Table 1 summarizes the raw variables aggregated for this analysis with reference to the original data sources. Some variables are then transformed to reflect likely lags (represented in Figure 2 and described in Section 2.3). We selected the period 1979–2021, which maximizes data availability for relevant variables while covering all periods of major expansion of transborder transmission capacity. 7 Hydro-Québec’s annual reports were consulted to acquire information regarding the company's generation capacity, its sales to the domestic market, its exports to outside markets, its annual revenues, and its investments in transmission and generation infrastructure. We quantify the rated capacity of transmission infrastructure developed (in MW) as a measure of transmission rather than the power exported in a given year (MW·h) because this is more consistent with the physical properties of the infrastructure subjected to permitting and environmental review. Capacity of transmission lines was often reported in kV, which is not directly comparable to generation or transmission in MW. We converted transmission capacity to MW using the transmission line power-transfer capability curve commonly known as the St. Clair curve presented in supplemental information (SI) Figure S1 (Gutman et al., 1979), calibrated using eight available data points and applied to seven remaining points where capacity in MW was unknown (Equation 1). R2 for the calibration curve was 0.998. Calibration and prediction data are included in SI Table S1. The calibrated St. Clair curve is written as: 𝑃=α!𝑉"+α"𝑉+ β Eq. 1 In Equation 1, 𝑃 is the maximum loadability (capacity) in MW; 𝑉 is the maximum voltage in kV; 𝛼! is a constant calculated via calibration as 0.004431; 𝛼" is a constant calculated via calibration as -0.5154; and β is a constant calculated via calibration as 20.82. To represent the disparities in electricity prices between these regions, we calculated the retail price difference between Quebec vs. NE USA based on average electricity price per kWh from both regions. We used retail price difference as a proxy for wholesale price difference since data for wholesale market prices was not available for the full period of our study (1979–2021). This approximation is justified by the strong correlation between retail and wholesale prices (Castro Pérez & Flores, 2023). A causal connection between other variables in the proposed network (Figure 2) and retail price would thus very likely imply a causal connection with wholesale price (or vice-versa). We tabulated other data related to climate, hydrology, and electricity sales to explore possible other correlations and identify potentially overlooked variables. These variables are described in SI Table S2 but are not retained in the final causal model described below. 8 Table 1: Summary of data aggregated for causal analysis, 1979-2021. Bolded variables correspond to conceptual Figure 2 and include values derived from underlying data sources. Unbolded variables allow calculation of certain derived variables. Variable name Units Description