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Table 13: Estimated Potential Annual Costs of Pollution without SewerageInfrastructure(year 2004)Impacts Million US$ %1. Tourism 2.85 142. Fisheries 3.00 143. Health 0.90 44. Property 14.20 685. Recreation 0.06 > 16. Biodiversity -Total (excluding non-use/ existence benefits) 21.01 (rounded to 21.0) 100The estimated GDP of Seychelles is $ 641.0 million, which implies that the annualpotential pollution cost is about 3.2% of the GDP.Table 14: Costs and Benefits of Sewerage Infrastructure in million $Year Capital Recurren Total Benefits Net PV @ 10% PV @Cost t Cost CostBenefit5%s2002 7.44 - 7.44 - (7.44) (6.15) (6.75)2003 - 0.54 0.54 - (0.54) (0.40) (0.47)2004 - 0.54 0.54 21.0 20.47 13.98 16.842005 2.14 0.54 2.68 23.9 21.22 13.17 16.622006 - 0.71 0.71 25.8 25.09 14.16 18.722007 - 0.71 0.71 27.7 27.00 13.85 19.182008 5.36 0.71 6.07 29.5 23.43 10.93 15.852009 - 1.14 1.14 31.3 30.16 12.80 19.442010 - 1.14 1.14 33.0 31.86 12.28 19.5510-year Net Present Value 84.62 118.982011 - 1.14 1.14 34.8 33.66 11.79 19.681012 - 1.14 1.14 36.4 35.26 11.55 19.632013 - 1.14 1.14 38.0 36.86 10.67 19.542014 - 1.14 1.14 39.6 38.46 10.12 19.422015 - 1.14 1.14 41.2 40.06 9.60 19.262016 - 1.14 1.14 42.8 41.66 9.06 19.082017 - 1.14 1.14 44.3 43.16 8.53 18.832018 - 1.14 1.14 45.8 44.66 8.03 18.552019 - 1.14 1.14 47.3 46.16 7.54 18.262020 - 1.14 1.14 48.7 47.56 7.07 17.922021 - 1.14 1.14 50.2 49.06 6.63 17.612022 - 1.14 1.14 51.7 50.56 6.21 17.282023 - 1.14 1.14 53.0 51.86 5.80 16.882024 - 1.14 1.14 54.5 53.36 5.42 16.5524-year Net Present Value 202.64 377.47Notes: The cost column shows the estimated capital cost for the construction of theSewerage System of $15 spread between 2002-2008. The operating cost is spreadlikewise. The benefits comprise those from the sources estimated and shown in theprevious table “Estimated Potential Annual Costs of Pollution without SewerageInfrastructure”. The value of tourism benefits are adjusted according to the figureson the right hand column of the Tourism Scenarios table. Benefits are assumed tobegin in 2004.Final Draft Report – Cost Benefit Case StudiesGPA Strategic Action Plan on Sewage, October, 200054
Table 15: Sensitivity Analysis ($ million)Estimated Investment Cost 15.0Annual Operating Cost capitalised at 10% for 24 years 10.24Total Estimated Investment Cost 25.24Present Value of Estimated Benefits at 10% for 24 years 227.88Net Present Value 202.64Benefit / Cost ratio 9Estimated Investment cost by 25% higher 25.0 x 1.25 = 31.0Estimated benefits by 25% lower 228.0 x 0.75 = 171.0Benefit / Cost ratio 5.54. Assumptions and ResultsThe calculations should best be regarded as orders-of-magnitude. Economic estimates areheavily dependent on the quality of data and the level of detail attempted. The capital costconcerns the estimated investment for the construction of the proposed Sewerage System forthe Beau Vallon Area and is taken as given. The estimated 25-year period Net Present Valueis $202 million at 10% and $377 million at 5%. This shows the sensitivity of the results to thediscount rate at which future benefits are translated into present values. The Net PresentValue (benefits over costs) shows the value of the net “wealth” created by the Project,available to society. It is noted that Cost-Benefit Analysis does not focus on the financialimplications (funding and cash flows) of the proposed project from the point of view of theimplementing agency, but to the saving quality of resources for future use by society.The Benefit/Cost ratio shows the coverage of costs by the expected benefits and, like the NetPresent Value, is an indicator of the social viability of the proposed Project. The ratio ofbenefits to costs is 9 meaning that the benefits are nine times the costs.The simple sensitivity analysis is attempted to show the changes to the results from highercosts and lower level of benefits. The Benefit-Cost Ratio is reduced to 5.5. The percentage of25% may be considered too high but it is wise to used it when cost estimates are broad andbenefit estimation contain possible errors an inaccuracies inherent in the available data.This Cost-Benefit Analysis does not include the cost of other measures on which informationis not available. This does not necessarily pose a major problem because it is possible tosuggest an alternative approach compatible with Cost-Benefit Analysis. There are datadifficulties involved. It is difficult to estimate the cost of institutional and legal measures, andexpenditure for strengthening departmental responsibilities for monitoring and research, etc.Also many measures may have cost overlaps, synergies or “economies of scale”. Also, thebenefits of pollution management cannot be fully realised by one-track infrastructure actionconfined to building and operating Sewerage Systems, although it may be the single mostimportant investment cost. Integrated environmental management programmes, coastal zoneplanning and commitment to sustainable development are essential constituent componentsof pollution management.How far could this issue be addressed within the framework of this present CBA? The aboveanalysis shows a NPV of $202 million. It is possible to suggest therefore that additionalmanagement, institutional, legal/regulatory, research and other initiatives, which are inany <strong>case</strong> required to support the long-term objectives of infrastructure projects,should be implemented even if they cost up to $202 million. In terns of CBA such level ofexpenditure over time would be justified. Of course, the separate question of financing suchexpenditure remains. The Case Study may also provide guidelines for identifying preliminarydesign options at l<strong>east</strong> from the cost point of view. The estimated investment cost of theProject ($15 million) will serve a population equivalent of 13,000. It should be possible toprioritise actions targeted at the most immediate hot spots problems yielding the higherbenefits per unit of investment. Social benefit should be a major consideration, together withcost-saving construction phasing, in prioritising the use of investment resources for sewerageinfrastructure.Final Draft Report – Cost Benefit Case StudiesGPA Strategic Action Plan on Sewage, October, 200055
Page 2 and 3:
TABLE OF CONTENTSPageTable of Conte
Page 4 and 5:
The Report includes four Annexes wi
Page 6 and 7: 4.2 Programme ObjectivesTo facilita
Page 8 and 9: TERMS OF REFERENCEThis Report has b
Page 10 and 11: CHAPTER 1. ECONOMIC ANALYSIS AND EN
Page 12 and 13: aesthetic and recreational value, i
Page 14 and 15: marginal benefit of pollution reduc
Page 16 and 17: loss of labour force productivity.
Page 18 and 19: Population connected to sewerage in
Page 20 and 21: Threats to the Coastal and Marine E
Page 22 and 23: fall disposal in deep sea at Kilind
Page 24 and 25: There are three main categories of
Page 26 and 27: Child mortality, and death in gener
Page 28 and 29: 6. Estimated Annual Cost of Environ
Page 30 and 31: 2.2 DAR ES SALAAM CASE STUDY2.2.1 I
Page 32 and 33: Dissolved solids 83,940 45,280 9,83
Page 34 and 35: 4. Institutional Capacity Building
Page 36 and 37: Table 8: Classification of ValuesTy
Page 38 and 39: infrastructure. As shown above, the
Page 40 and 41: 6. MangrovesMangroves are an exampl
Page 42 and 43: • The total cost in column (3) is
Page 44 and 45: 2.3 BEAU VALLON (SEYCHELLES) CASE-S
Page 46 and 47: In the marsh areas, various species
Page 48 and 49: Dissolved inorganic nitrogen: The t
Page 50 and 51: TourismSeychelles• Number of tour
Page 52 and 53: lossesHuman Health Indicator: Treat
Page 54 and 55: Dose-response data are not availabl
Page 58 and 59: CHAPTER 3. ACTION PROGRAMME INPUTS3
Page 60 and 61: Property impacts are widely known t
Page 62 and 63: 3. Wastewater Treatment in Ismailia
Page 64 and 65: • Health costs• tourism income
Page 66 and 67: Annex IRegional OverviewThe Western
Page 68 and 69: • Degradation of coastal and mari
Page 70 and 71: • Resource over-exploitation• S
Page 72 and 73: Annex IIMombasa Regional and City P
Page 74 and 75: Population covered by sewerage infr
Page 76 and 77: Source: Mwaguni & Munga 1997Sewage
Page 78 and 79: 1628 people tested positive for cho
Page 80 and 81: Annex IIIDar-es-Salaam Regional and
Page 82 and 83: are extensively exploited by small-
Page 84 and 85: Solid wastes. It is estimated that
Page 86 and 87: Pollution load to surface water res
Page 88 and 89: Mtoni and Pugu. Existing lakes incl
Page 90 and 91: Annex IVSeychelles (Beau Valon Area
Page 92 and 93: labour force generating the major p
Page 94 and 95: Vacoa Village ST Algal growth Water
Page 96 and 97: sea grass beds are able to soak up
Page 98 and 99: Sewerage ManagementSewerage managem
Page 101 and 102: REFERENCESA. Background Regional En
Page 103 and 104: 7 GOK 1997: Mombasa District Fisher
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