Abstract
The rapid development of the industry and the increase of the total population cause a severe energy shortage in the future and this situation forces us to find new energy alternatives like hydropower to maintain the sustainable development¡£Three Gorges Project is therefore coming into stage and it drawn the world attention and becomes the most controversial project in the world since it was approved to be constructed. I first adopt standard cost and benefit analysis to appraise TGP and then reappraise it by applying environmental cost and benefit analysis. Furthermore, based on Finn R. F©ªrsund¡¯s hydropower economics analysis, I extent the analysis of three gorges project by adding environmental issue into F©ªrsund¡¯s models and find the optimal solutions.