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Property impacts are widely known to depend on surrounding environmental amenity.Coastal and near-coast property is particularly vulnerable to environmental quality. To obtainbetter estimates of the environmental impacts on property value it is necessary to compareproperties with identical or similar characteristics (size, building quality, accessibility, etc.) inpolluted and pollution-free locations to isolate the impact of pollution. It would also bepreferable to use city zoning and land value maps to determine the proportion of residentialproperties falling within the “sphere of influence” of the coastal environment. In the CaseStudies, a conservative percentage of 5-10% reduction / appreciation of value is used on a20-25% of the housing market.The qualitative aspects are even more difficult to assess and require special ContingentValuation (CV) research results. The indirect effects of pollution on recreation (and thebenefits from pollution management) are classified in the Case Studies as qualitative due tolack of questionnaire data estimating people’s willingness-to-pay (WTP) for recreationalopportunities.In other words, the “total” benefits of sewerage infrastructure are under-estimated inthe Case Studies since, of lack of choice, they left out indirect and non-use benefitscomprising a very important category of benefits of potentially high socio-economicvalue, characterised as qualitative.To estimate indirect and particularly non-use benefits, CV studies are required. Such studiesare widely used tools to assess the social valuation of coastal and marine resources and theirbiodiversity significance (The Economic Value of Biodiversity, D. Pearce and D. Moran, 1996,also, Review of the Empirical Biodiversity Literature, Cynthia Cartier & Jack Ruitenbeek,2000). To assess total benefits, special studies should be carried out on resource valuationfocused on the social value of non-market benefits associated with conservation of coastaland marine ecosystems. When no value is given to the quality of non-market resources, dueto lack of estimates, decision-makers would still agree that ecosystem degradation is an"undesirable" environmental issue but may be encouraged to think of it as an issue beyondmanagement solutions and outside the ambit of environmental investment analysis. If such anapproach prevails, how will then proposals for increased investment for coastal zonemanagement be evaluated and justified when coastal ecology is assumed to have zero orunknown social value?Given that CV requires capacity-building and research resources, many Cost-Benefit Studiesconducted within strict time limits underline the fact that the estimated benefits under-estimatethe total value of benefits as they exclude the non-use biodiversity benefits. This perhapsillustrates the fact that despite much methodological progress and impressive results, Cost-Benefit Analysis of environmental management programmes is still a developing perspective.It should therefore be underlined that most Cost Benefit Case Studies, if not all, are at bestpartial, including only some of the total benefits from policy actions. Also, Cost BenefitAnalysis is rarely entirely conclusive and completely accurate in numerical terms. Cost-Benefit Analysis, unlike biophysical analysis, concerns socio-economic responses to pollutionand environmental degradation that can never be studied under strictly controlled “laboratorytype”conditions and, therefore, data and measurement methods are inherently orders-ofmagnitude,subject to margins of error. Nevertheless, the results generated provide importantconclusions about a whole range of benefits that would otherwise remain conceptually vague,and ignored as “inaccurate” and remain outside the decision-making process. The choiceseems to be between using an approximate value for estimating benefits and a zero value.Assuming a zero value is certainly unhelpful as an approach to justify coastal zonemanagement actions.Final Draft Report – Cost Benefit Case StudiesGPA Strategic Action Plan on Sewage, October, 200058
3.3 Annotated Cost-Benefit Case Study ExamplesIt may be useful to cite a few Cost-Benefit Case Study examples to illustrate the commontechniques and the typical results produced by this approach. The examples below also showsome interesting parallels with the Case Studies presented in this Report.1. Cost and Benefits of Measures for the Protection of the Environment from land-Based Sources of Pollution: Case Study of the Island of Rhodes, Glafkos Constantinides,UNEP/MAP Technical Report Series No. 72, 1992.Population: 106,500 – growth rate 1971-81 2.2% p.a.Area: 1,400 sq. km.Location: Greece, south-eastern corner of the Aegean SeaMain economic activity: Tourism – arrivals 981,000 (1990)The estimated monetised effects / damages of pollution was approximately $15.2 million, representingabout 3% of the island’s GDP.Costs and Benefits of Projects for the Protection of the Marine EnvironmentCosts of InvestmentAmount ($ million)Rhodes city sewerage system 46.0Annual operating cost 1.6 million – capitalised at 10% for 30 years 15.0Total Investment Cost 61.0Estimated annual benefits from:• Cost savings• Property value increase• Tourism incomeTotal annual benefits4.6 (28.5%)7.5 (46.5%)4.0 (25%)16.1 (100%)Present Value (30 years / 10%) 152.0Net Present Value 91.0Benefit-Cost Ratio 2.5This case study illustrates at least two fundamental issues:First, that investment for reducing the degradation of the coastal environment from land-based sourcesis associated with significant direct and indirect benefits which can be estimated in approximatemonetary values. Second, that despite numerous estimation and measurement problems, cost-benefitanalysis can and should be fully introduced as an instrument for the preparation of environmentalmanagement programmes focusing attention on the benefits justifying the required expenditure.2. Costs and Benefits of measures for the protection of Degradation of theEnvironment from Land-Based Sources of Pollution: Case Study of the Bay of Izmir,T.I. Balkas and F. Juhasz, UNEP/MAP, Technical Report Series No. 72, 1992Population: 1.8 million (1992), 2000 projected 2.3 millionArea: The urban conurbation around the bay (Izmir Metropolitan Municipality) is 88,000 haLocation: Turkey, western part of the Aegean SeaMain economic activity: Industrial, commercial, tourism and port centreCost and benefits of the restoration of the BayCost of InvestmentAmount ($ million)Sewerage System for domestic and industrial wastes 938.0Running Cost 75.0 – capitalised at 10% for 25 years 680.01,618Estimated discounted benefits (conservative scenario) from:• Tourism• Fisheries• Salt production• Ground water• Corrosion• Recreation• Health (water use)Total3,412 (71%)133 (3%)843 (18%)70 (1%)25 (0.5%)225 (5%)65 (1.5%)4,773 (100%)Net Present Value 3,155Benefit Cost Ratio 3.0Preliminary assessment suggests that the benefits of the proposed sewerage system for Izmir and theimplementation of the protocols of the Barcelona Convention could significantly outweigh the costs ofthe control measures by a factor of 3. The result is based on tourism-led future development of the Baywhich appears to be environmentally the least damaging and economically the most beneficial.Final Draft Report – Cost Benefit Case StudiesGPA Strategic Action Plan on Sewage, October, 200059
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 56 and 57: Table 13: Estimated Potential Annua
Page 58 and 59: CHAPTER 3. ACTION PROGRAMME INPUTS3
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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