The Internalization of Externalities from Electrical Power Plants as a Tool for Progressing Towards Sustainability in Small Island Developing States: The Case of Bahrain

Power is the engine of growth of any economy. Consumption of electrical energy is a universally accepted indicator of progress in the productive sectors, and of the well being of the people of any country. No major economic activity can be sustained without an adequate and reliable supply of power. It plays a critical role in employment generation, development and social welfare. This chapter provides background information on this research. The first section provides general information about the electricity production sector in Bahrain and the scientific knowledge base about externalities. The second section examines theoretical discussions about externalities. It provides a theoretical base for building this thesis‟ research framework on how to use economic valuation of externalities in the policy making process in the electricity production sector? What is the appropriate methodology to calculate and internalize the externalized costs of electricity? This is one of the main questions that this thesis researcher sought to answer.