Economics of the Columbia River Treaty

For more than 50 years the Columbia River Treaty has amplified the power and flood risk benefits for Canada and the United States by regulating flows on the Columbia River. The Columbia River Treaty resolved the externality of downstream benefits but created another when ecosystems were adversely affected. In addition, the power sharing calculations have become obsolete and the flood risk provision will revert to an annual operation in 2024. All this has precipitated a new negotiation between Canada and the United States to modernize the Treaty. This research analyses the objectives for this negotiation and strategies to achieve it in terms of economic principles.