Water is one of the basic needs of all living beings. It is a natural resource with zero cost. No other alternative has been found to replace water. Water demand is increasing day by day, but the amount of water that can be used by living beings is not increasing. In other words, the availability of water is not sufficient to fulfill the increasing demand. Thus, a value is added to the water, and it changes from time to time for several reasons. As a result of water being free, variation of water value is not considered in most project evaluations. Sri Lanka’s power system consists of three major hydropower cascades and the water value has a considerable impact on power plant dispatching. Generation cost varies due to the availability of water. The utility side of the Sri Lankan power system does not calculate water value at each stage of their generation planning. It considers the reservoir water to be at zero cost. However, reservoir water is used for multiple needs such as drinking water and irrigation which are also commercial applications. This research paper discusses the water value concept and suggests three methods to calculate water values. Moreover, analyze the results of each method.