Environmental constraints imposed on hydropower plant operation are usually given in the form of minimum environmental flows and, in some cases, in the form of maximum and minimum rates of change of flows, or ramping rates. Environmental constraints reduce the amount of water available to produce electricity and limit the contribution of peak hydropower plants to adapting the power supply to the demand and to providing certain ancillary services to the electrical grid, such as spinning reserve or load-frequency control The objective of this paper is to assess the economic impact of environmental constraints on short-term hydropower plant operation For that purpose, a revenue-driven daily optimization model based on mixed integer linear programming is used The model considers the head variation and its influence on the units' efficiency, as well as the option of starting-up or shutting-down the plant at any hour of the day, should it be advantageous, while releasing the environmental flow through the bottom outlets. In order to illustrate the applicability of the methodology, it is applied in a real hydropower plant under different operating conditions and environmental constraints (C) 2010 Elsevier Ltd All rights reserved