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78 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA improvement in Bangladesh’s trade balance. The increase in trade is the difference in the trade balance in with- and without project scenarios. Access to Education, Markets, and Infrastructure: Several quantifiable benefits emerge for the local population with better connectivity. These will not be large as compared to the figures of improved trade but they can be compared to the resettlement costs to see long-term local benefits emerging from the project. The corridor under consideration is in proximity to SH1, and has features similar to this and SH10. 11 The categories of affected persons include project affected households and communities, both vulnerable and nonvulnerable; small business enterprises (SBE), such as tea shops, temporary markets, or mechanics; and informal dwellers or squatters, who are illegal or unauthorised occupants. While there will be costs of relocating these persons and structures, there are increased opportunities for them as well. In order to compute incremental benefits from better access to education, markets and infrastructure facilities, we compute a valuation for time savings in Table 9.7. Assuming each person saves 2 hours a day and can be gainfully employed in this time, we attach a monetary valuation to the times savings for 2000 households. This is valued at the current wage rate at Rs 10 per hour. Table 9.7 Estimated Time Savings from the Project Unit Current time savings per household per day 120 minutes Total time savings per household annum 92 days Number of beneficiary households in 2000 the area Wage rate at Rs 10 per hour, savings per Rs 7,300 household Benefits from Time Saved Rs 14,600,000 Benefits from Time Saved $339,535 Employment Benefits Normal road projects have a high labour component and wage bills are approximately 30% even for large national highway projects. Hence, we can make a conservative assumption that 20% of projects costs is the wage bill, which is a direct benefit for the people of the region. Indirect employment benefits will come from increased employment opportunities in the region due to better connectivity and facilities. We assume that employment benefits accrue only during the time of project implementation. Total Benefits: A summation of national benefits from increased trade and local benefits from increased employment and education and market opportunities yields total benefits from the project. The trends of additional benefits with the project over time are in Table 9.8. Table 9.8 Total Benefits from the Project (US $) Year National Net Employment Time Net Benefits Exports Benefits Savings 1 2,500,000 –10,000,000 5 2,500,000 –10,000,000 10 78,918,155 339,535 79,257,690 15 164,112,799 339,535 164,452,334 20 341,265,215 339,535 341,604,750 25 709,619,187 339,535 709,958,722 Benefits Costs Analysis The detailed result of a benefits costs analysis, should the government undertake such a project on its on, is conducted as the base scenario. We take a 27 year scenario with $125 million as project costs incurred over the five years at 10% in the first year, 20% in the second, 30% in the third and fourth year, and 10% in the last year. 20% of costs are the wage bill. Trade and time-savings benefits are assumed to accrue only after the end of the project. We take $1 million as maintenance costs in two phases. The main results from the exercise are summarised in Table 9.9. Table 9.9 Results from Benefit-Cost Simulations Economic Rate Net Present of Return (%) Value (NPV) ($) Base Calculation 37.73 638,788,238 Benefits lagged by 1 year 24.36 441,535,923 Benefits lagged by 2 years 22.70 350,285,175 Costs up by 10% 35.78 629,890,479 Benefits lagged by 1 year 23.23 424,693,737 Benefits lagged by 2 years 21.66 334,294,177 Benefits down by 10% 35.99 567,933,080 Benefits lagged by 1 year 23.22 382,254,281 Benefits lagged by 2 years 21.64 300,794,717 The base calculations have been computed with the conservative assumption that the project will lead to 11 ADB (2001b) estimates 1834 persons are affected along SH1 and SH10 in West Bengal (including bypass) as, categorised according to ownership of structures. Retail service shops along the roads are 35% while food kiosks are 29%. Over 60% of the small businesses are owner-operated.
QUANTIFICATION OF BENEFITS FROM TRANSPORT AND TRADE FACILITATION IN SOUTH ASIA 79 2% increase in exports and 4% increased in imports from projected levels and that the benefits will accrue only after the project is fully completed. The NPV at this base case is $638 million and the EIRR is 37.73%. Both the NPV and EIRR for different scenarios indicate that the project is economically viable and they are not overly sensitive to decreased benefits or increased costs. BAGDOGRA AS A GATEWAY AND HUB ADB’s Tourism Development Plan (2005) cites strong support from tourism stakeholders in northeast India, particularly in Sikkim, for establishing Bagdogra in Siliguri district, West Bengal, as an international airport. The TDP recommends a planning study to assess potential tourism benefits. A preliminary analysis is provided here. Development of Bagdogra airport will open vast tourism potential in Bhutan, Sikkim and the northeastern states of India, eastern Nepal, and northern Bangladesh. Bagdogra will provide an alternative and additional gateway to Kathmandu for mountain tourism. New and innovative packages can be developed over time. We consider here the principal economic impacts of tourism, geographical distribution, direct and indirect financial and economic benefits and costs associated with tourism, and the impact on economic welfare in the northeast region of India (excluding West Bengal). India’s tourists mainly come from North America, Western Europe, and South Asia, which respectively accounted for 19%, 31%, and 24.5% of arrivals in 2003. Bangladesh alone accounted for 455,000 tourist arrivals in 2002, or 17% of the total. New Delhi is the main port of entry for foreign tourists into the country. Kolkata accounted for 3.7% of total arrivals in 2003 but for 5.5% of the South Asia arrivals. The number is likely to be much higher when overland cross-border traffic is included. Foreign arrivals to the northeast states are low, averaging only about 19,000 annually over the last 5 years. Sikkim has been successful in attracting high-yield domestic market segments as well as trekkers, youth training groups, and adventure enthusiasts. Despite a wide range of tourist attractions, the eastern Himalayan region has been unable to achieve the full potential of benefits from tourism. At the subregional level, Bangladesh’s has poor tourism image abroad and Bhutan’s high-end tourism policy has not helped the region. The TDP summarises the main issues as: air access and connectivity constraints; security and safety concerns; weak tourism infrastructure, including road, rail, air, electricity, water, sanitation, and telecommunications; poor standard of their tourist services, particularly health and hygiene facilities, attitudes toward hospitality, and the dearth of tourist information and wayside amenities for road travel; and complex requirements for inner line and protected area permits (PAP) for Arunachal Pradesh, Mizoram, and Nagaland in India’s North East, and trek permits and various other restrictions on internal travel. Multitude of PAP regulations relating to tourism, environment, forest, ecology, and wildlife exist, many promulgated before independence. Tourism operators report that the complexity of the legislation is a constraint to development. Only Assam currently has one recognised tourist transport operator. There are no Ministry of Tourism recognised operators in these categories for any of the other northeastern states or Sikkim. Indian tourism includes an enormous unorganised sector that supplies vital services to visitors without the use of trained personnel. The Potential Fig 9.4 Bagdogra Airport The rugged, mountainous region of India comprises mostly poor rural farmers and there is vast potential to develop its tourism attractions. The rich, natural flora and fauna allows for the development of ecotourism such as wildlife and jungle tourism; nature and mountain trekking; and leisure traffic trips planned around orchid and pineapple orchards. Village and tribal experiences can be planned around the rich art and culture traditions. Dance forms of the northeast are varied and well-known. The themes may be religious, social, agricultural or recreational. Traditional handicraft skills have been handed down over generations and are integral to the daily lives and routines of the people of the region. The range of crafts
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QUANTIFICATION OF BENEFITS FROM ECO
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QUANTIFICATION OF BENEFITS FROM ECO
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Preface Our consultations with seni
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viii CONTENTS 7. Revenue and Welfar
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Executive Summary OBJECTIVE This st
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EXECUTIVE SUMMARY xiii Table 1 EAMA
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EXECUTIVE SUMMARY xv India A full S
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EXECUTIVE SUMMARY xvii indicates th
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EXECUTIVE SUMMARY xix ments on basi
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Part I BENEFITS FROM TRADE, INVESTM
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4 QUANTIFICATION OF BENEFITS FROM E
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10 QUANTIFICATION OF BENEFITS FROM
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2 Literature Review and Rationale f
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15 Prospects for the Telecommunicat
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APPENDICES
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Appendix 8 Intra SAARC FDI Collabor
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Appendix 11 Table A11.1 On an Emplo
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Appendix 12 Original Commitments/In
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Appendix 14 Table A14.1 Telecommuni
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Appendix 15 REFERENCE PAPER Scope T
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Bibliography Abelson, P. (1996),
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BIBLIOGRAPHY 241 Cuba (2002), Negot
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BIBLIOGRAPHY 243 (2004), Impacts of
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BIBLIOGRAPHY 245 Silva, Patricia an
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BIBLIOGRAPHY 247 (1998), Tourism Se
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