Final Report - Asian Development Bank

10
TA 4721-PRC: Preparing the Shaanxi-Qinling Mountains Integrated Ecosystem Management Project
Final Report Appendix 13
42. The economic analysis of the QBG estimated the EIRR to be 10.9% - see Table 6. Again
whilst above the hurdle rate for the PRC it is marginally viable for ADB purposes highlighting the need
for the previously recommended review of costs.
Table 8: QBG Economic Net Cash Flow
Item 2008 2009 2010 2011 2012 2013 2014 2015
Cash in 0.0 0.0 0.0 3706.5 4853.8 5371.1 5888.5 6405.8
Revenue
Residual Value
0.0 0.0 0.0 3706.5 4853.8 5371.1 5888.5 6405.8
Cash out 9302.0 24345.6 2935.4 4059.4 2672.7 2672.7 3670.6 3609.3
Investment 8244.0 22190.0 443.0 1386.7
Operating cost 965.1 2155.6 2492.4 2672.7 2672.7 2672.7 3670.6 3609.3
Working capital 92.9
Net Cash Flow -9302.0 -24345.6 -2935.4 -352.9 2181.2 2698.5 2217.9 2796.5
EIRR 10.85%
ENPV 3638.5
43. The EIRR is relatively sensitive to the movement in revenue and costs. Given the difficulty in
revenue forecasting there is a need for careful reassessment of the investment and the underlying
assumptions. The PPTA has been concerned about the assumptions and as a result has taken a
conservative position for visitor numbers. The PPTA concludes that the QBG is a viable investment
but there is considerable risk of commercial failure arising during the first 5 to 10 years. Experienced
commercial management, cost reviews and more market research are important risk management
strategies.
Table 9: Economic Analysis Sensitivity Analysis
EIRR ENPV
Operating Cost (10% up) 9.99% -59.1
Operating Cost (20% up) 9.41% -2614.1
Operating Cost (10% down) 11.16% 5050.8
Operating Cost (20% down) 11.77% 7607.7
Revenue (10% up) 11.79% 8107.9
Revenue (20% up) 12.95% 13720
Revenue (10% down) 9.26% -3116.2
Revenue (20% down) 7.85% -8728.3
ii. Shaanxi Animal Rescue Center
44. The expansion, modernization and enhancement of SARC to international standards is
intended to: (i) significantly increase the personnel and material investments made in wildlife
protection in Shaanxi to improve animal welfare and the survival rate of rescued animals; (ii) rescue
endangered animals more efficiently and provide a better natural environment for the animals that are
raised on site; (iii) develop an important high-quality site for eco-tourism that meets the needs of the
modern, well informed and highly demanding tourist, (iv) increase public awareness and support for
the rescue, breeding, science, research and public awareness functions of the SARC; (iv) conduct
scientific research on wild animal conservation and expand cooperation, information exchanges and
partnerships with similar agencies in China and abroad; and (v) distribute information and knowledge
on wildlife conservation to promote greater harmony between animals and people.
45. SARC is planning a two phase development with the Project part financing Phase One.
Accordingly, phase one and two investments are proposed to address a number of problems with the
current SARC facility namely: inadequate rescue equipment, small size and poor layout of the current