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As-Built Cost-Benefit Comparison of Contemporary Greenfield Construction Sites in the Yellow Sea Region – Study Proposal
1. Objectives and Purpose
The work proposed here seeks to provide tools for greenfield-construction site selection. Site selection is an investment decision, where the invested resources may be partly private, but often include government financing, tax incentives, or public natural resources. So, the proposed tools and methods are designed to facilitate efficient use of tax money and natural resources by private and government decision makers. In particular, the proposed tools would facilitate cost-benefit based comparisons of greenfield-construction sites on reclaimed land, hilly land, and agricultural land.
Development of the following tools and methods is proposed here:
- a cost-benefit analysis method summary relevant to the Yellow Sea region, which could build on Endo (2008),
- several cost-benefit case studies of completed projects, as built, from both China and Korea, and
- a database of input information for greenfield construction site cost-benefit analysis, based on the case studies.
Garbage in - garbage out sums up a major challenge to producing accurate cost-benefit analyses. Most relevant existing cost-benefit analyses were completed during project planning, so include estimated values. As-built (ex post) case studies can provide more accurate economic information on both internal and external costs. The input-information database created from these case studies would help solve the garbage in - garbage out problem, and could be added to over the years as more information from future economic analyses becomes available. The lists of site acquisition, preparation, and maintenance costs in Section 3, Conceptual Framework, below provide a draft of budget categories to include in the economic analyses.
1.2 Purpose – why do site-selection decisions deserve the effort of a cost-benefit analysis?
Contemporary site selection near the Yellow Sea often involves deciding between building on reclaimed land, hilly land, or agricultural land. Improved understanding of the full costs of these options could help with decision making. Cost-benefit analyses are expensive and time consuming; completing them for reclaimed-land sites, via a comparison to alternate construction sites, is worthwhile because:
- unlike pollution and overfishing, the consequences of land reclamation are permanent,
- unit costs will decrease with each cost-benefit analysis completed, and so
- completing as-built cost-benefit analyses of recently developed greenfield construction sites will reduce costs of future analyses by providing a database of input information, a methods demonstration, and capacity building at the participating Korean and Chinese institutions.
1.2.1 Forty years of clean-water efforts in the USA.
In the United States of America (USA) about 40 years ago, decision makers faced challenges similar to the those currently being addressed around the Yellow Sea, including pollution, overfishing, and loss of coastal wetlands due to land reclamation. In the USA, the following steps have been taken in the last 40 years at considerable expense:
- strict limitations on wetland filling (as well as restoration requirements -- the "no net wetland loss" policy),
- improved collection and treatment of domestic sanitary wastewater (including improved private septic system standards),
- rigorous treatment requirements for wastewater from the remaining industrial facilities (many have closed or moved), including both those that discharge directly into public waters as well as those that discharge into public sanitary sewers,
- management of wildlife populations via stocking and controls on fishing and hunting,
- cleanup of past contamination, such as contaminated sediment dredging from rivers and harbors,
- agricultural erosion control and soil conservation, and
- more recently, construction site erosion control and urban area (streets, roofs, etc.) storm-water treatment.
The general result in the USA is that:
- pollution discharges from residential, commercial, and industrial wastewater are now much lower,
- urban growth has increased pollution from storm-water discharges but measures now are in place to address this,
- water quality in rivers and harbors has generally improved, though many water bodies are still too polluted to safely fish or swim in,
- some fish and bird populations have recovered, especially actively stocked species; however,
- much of the species diversity and self-sustainable populations have not recovered and
- a negligibly small amount of filled coastal wetlands have been restored, so that the valuable habitat, flood control, storm-water pollution filtering, recreational, and other services these wetlands once provided the USA remain lost.
Since about two hundred years ago, about half of the wetlands in the USA have been filled or drained. Since 1970, even with enormous government and private spending and decades of effort on improving water quality in the USA, wetland filling (reclamation) has generally been irreversible. Though some cropland on drained wetlands has been restored to wetlands, the new land uses on filled wetlands (buildings, wharves, roads, etc.) are typically permanent. The resulting loss in ecosystem-services value is probably permanent, at least over time periods relevant to humans. Compared to problems caused from overfishing or pollution, loss of high quality, biologically diverse wetland habitat is much more difficult to reverse, even when efforts at restoration are made.
Pertinent cases from the USA include Baltimore Harbor, Boston Harbor, possibly Galveston Bay or Mobile Bay on the Gulf of Mexico, and Green Bay on Lake Michigan. Though Green Bay is freshwater, continues to be disrupted by invasive species, and has routine wind-induced water-level fluctuations of only about 20 cm, it provides an interesting comparison to the Yellow Sea because its watershed continues to contain large-scale heavy industry, including paper making and food processing, along with agriculture and tourism. By contrast, much of the heavy industries in the Boston Harbor and Baltimore Harbor watersheds have closed or moved away. Gulf Coast estuaries and watersheds -- with their active chemical, oil, and other industries, agriculture, and fishing fleets -- may provide the best comparison to the Yellow Sea; however, much of the growth in these areas occurred after the 1970 and 1972 amendments to the U.S. federal Clean Water Act, which greatly reduced wetland and coastal filling, so the area of past land reclamation is much smaller around the Gulf Coast than around the Yellow Sea. The climate on the Gulf Coast is also much warmer than the Yellow Sea.
Click here for more information on work that could be done to make economic statistics and analyses on cases from the USA better available to Yellow Sea region decision makers.
1.2.2 Why spend time conducting cost-benefit analyses on existing projects "as-built"?
Experiences from the USA, Europe, and elsewhere give Yellow Sea region decision makers a chance to look into an imperfect crystal ball and see where 40 years of cleanup and conservation efforts may lead. However, the most pertinent cost and benefit information could come from analysis of recent Yellow Sea land reclamation and seawall construction projects. Projects undertaken in the last 20 years have converted hundreds of square kilometers of coastal wetlands to other uses. In the English-language literature, the most recent estimates of the area of coastal wetland loss around the Yellow Sea date from approximately 2000-2001, and since then coastal wetland filling, seawall construction as well as dam construction and river-water diversions -- resulting in loss of sediment inflows to tidal flats -- have continued to occur. Citing a year 2000 Republic of Korea, Ministry of Maritime Affairs and Fisheries, study, Bang (2003) reported "coastal reclamation and infilling areas" completed or ongoing "from 1962 to 2003" in the Republic of Korea of 2,622 square kilometers, "of which 1,778 square kilometers is coastal waters" (pp. 6 and 11). Bang (2003) also reported 2,393 square kilometers of "tidal mud flats" on the Republic of Korea's west and south coasts (p. 5). Barter (2002) and Bewers (2007) described a roughly 40% loss of tidal-flats around the Yellow Sea during approximately the 20th century, citing, ultimately, Moores et al. (2001) and Yuan et al. (2001). Moores et al. (2008) also rely ultimately on these and earlier sources, which provide more detail. Yu and Ruan (2003) wrote that along the entire coast of the People's Republic of China, "about 10.5 million ha [105,000 square kilometers] of tidal lands have been reclaimed for agriculture, salt-making fields, mariculture (e.g. shrimp ponds), ship berths, and other uses since the middle of the 20th century. This led to the losses of almost half of the country's tidal lands and about 70% of the country's mangroves" (page 14). In addition, Gu (2007) provides a satellite-based survey for Jiaozhou Bay, Shandong, China from 1952 to 2002.
News reports continue to indicate the ongoing conversion of hundreds of square kilometers of Yellow Sea intertidal and shallow-sea coastal areas to other uses, including at Jiaozhou Bay, Shandong, China; SaeManGeum, JeollaBukDo, Korea; Songdo City, Incheon, Korea; and other sites. Plans for additional reclamation as well as development on recently or partially reclaimed areas remain in place. (See, for example, Birds Korea 2009.03.24, China Daily 2008.03.20, JoongAng Daily 2010.01.30, Korea Times, The 2008.09.11) As-built cost-benefit analysis of recent reclamation projects, especially if the economic analysis includes a comparison with recent Yellow Sea region greenfield construction sites on agricultural land and in the foothills of mountains, would provide useful and currently unavailable information that could assist decision making about where to locate greenfield construction sites within the Yellow Sea region.
2. Prior work – comments on Guideline for Economic Analyses of Environmental Management Actions for the Yellow Sea (Endo 2008)
This handy summary of economic analysis methods published by the UNDP/GEF as part of their project entitled "Reducing Environmental Stress in the Yellow Sea Large Marine Ecosystem" (YSLME Project) describes a procedure for cost-benefit analyses (Section 3.2) by means of the hypothetical case of a "coastal development plan to convert a wetland into various industrial usages." (Endo 2008, p. 23)
When estimating the costs of a management action that would reduce the size of the reclamation, Endo (2008) indicates:
The opportunity costs are assumed here to be the forgone future benefits from industries that would be established if the reclaimed land area were not reduced. Supposedly, it would take one year to establish the proposed industries; therefore, the forgone future benefits from them would accrue from the second year and onwards. (p.27)
In other words, in this example, the opportunity costs of not converting a wetland into industrial usages would be not having the industry at all. However, the opportunity cost may more accurately be estimated as the loss of use of some other land where the industry could be located instead, for example, agricultural land or hilly land. Determining the opportunity costs of not using one potential greenfield site would require comparison with the site acquisition, preparation, and maintenance costs of alternative greenfield sites. For example, the costs of buying land, grading, managing storm water, preventing mudslides and forest fires, driving vehicles up the hill, etc. on a potential hilly land site might be compared with the costs of buying water frontage or access, installing a seawall and fill on mudflats, procuring flood insurance if needed, pumping sewage up to treatment facilities, etc.
Sites for industry or other uses could be created either way, they would just have different site acquisition, preparation, and maintenance costs. Of course, they would also have different external costs, which the economic analysis would also have to quantify when considering the costs and benefits of alternative land-use plans and rules, such as strict restrictions on wetland filling, or other methods of internalizing costs to achieve more efficient greenfield construction site selection.
A minor method comment -- in addition to the methods described by Endo (2008), cash-flow diagrams can be quite handy for getting a big-picture understanding prior to getting into the nitty-gritty of cost-benefit analysis.
3. Conceptual framework – Yellow Sea Region Greenfield Construction Sites
This section provides definitions and details suggesting ways to get started on the economic analysis proposed here.
Because government entities or public corporations are often involved in large construction projects, and sometimes are the lead developer, I use the following terminology here:
- internal costs – costs accounted for in the budgets of the entities acquiring, preparing, or maintaining a construction site (including privately or publicly owned organizations, government bodies, or various hybrid forms) and
- external costs – costs customarily left off such balance sheets, which must be borne to a greater or lesser extent by various members of the general public, without compensation or the opportunity for profit. Thus, external-cost estimates attempt to quantify negative effects on public welfare and, perhaps also, public safety, public health, wildlife, or the regional or global environment.
The term construction site here refers broadly to places for constructing new residential, commercial, or manufacturing buildings as well as new facilities for food production, such as aquaculture or feed lots (concentrated animal feeding operations). Locations for the linear portions of transportation systems (highways, railroads, canals, pipelines, power lines, etc.) are outside the scope of the evaluation proposed here, though a similar comparative economic analysis may be suitable. However, the proposed economic analysis could be applied to sites for local streets and parking lots, airports, railroad terminals, tank farms, and -- keeping in mind their coast dependence -- at least portions of port facilities. Potential construction sites are often classified roughly as follows. These are loose, often overlapping terms.
- brownfields – abandoned and often contaminated industrial or commercial land,
- infill sites – vacant or underutilized land in existing urban or suburban areas,
- gentrification, slum clearance, etc. – conversion of lower-income, typically older neighborhoods to new higher economic-value uses, and
- greenfields – pretty much everything else, such as agricultural land and areas that people only directly use for fishing, gathering, hunting, spiritual needs, and recreation.
Due to sustained high rates of economic growth around the Yellow Sea in recent decades as well as political resistance to gentrification, construction on greenfield sites is common and likely to continue at a rapid rate. Around the edges of the Yellow Sea, commonly used greenfield sites for new construction can somewhat simplistically be placed into three categories:
- cropland – mainly rice fields, particularly in lower areas, and fields of other cultivated plants in dryer areas,
- hilly land – mainly foothills of the numerous mountains near the Yellow Sea coast, and
- seashore areas – intertidal mudflats and sandflats, other coastal wetlands, estuaries, and shallow portions of the Yellow Sea.
I did not include freshwater wetlands in the above list of greenfield sites because, generally in the Yellow Sea region, freshwater wetlands that are not already protected in parks or nature preserves are so close to rivers that frequent and rapid floodwater flows discourage building construction or agriculture. Many freshwater wetlands in the Yellow Sea region were converted to cropland, typically rice, decades or centuries ago.
Click here for photos showing the three categories of greenfield sites defined above as well as freshwater wetlands and levees.
A preliminary list of budget items worth considering when comparing these three types of greenfield construction sites via cost-benefit analysis is presented below.
3.1 Cropland greenfield construction sites
3.1.1 Cropland site-acquisition costs
Approaches to estimating this include:
- market prices of cropland real estate and
- present value of net income from all future crop yields.
The second approach can be used where a cropland real-estate market does not exist, provides insufficient data, or is excessively influenced by land-use regulations that prevent the conversion of cropland to other uses.
Both approaches will include to some extent in their cost estimates the cultural and political value placed on cropland in particular locations. For example, both approaches will capture the effects of subsidies and trade protection via local market values for cropland real estate and crop prices, respectively. By reflecting such rule-based influences on land or crop prices, both methods above will reflect to some extent a legitimate, though sometimes manipulated, desire for national food self-sufficiency to provide security in times of war, trade war, flu pandemics, etc. The desire for national food self-sufficiency has long and strong historical roots in the Yellow Sea region, and needs to be given proper consideration in pricing models.
Both approaches provide estimates with considerable uncertainty due to:
- large fluctuations in crop market prices in recent decades, which are likely to continue,
- speculative bubbles in real-estate prices,
- local variations in cropland yields due to soil, slope, water supply, irrigation investments, etc.
- potential for new technologies to increase crop yields,
- effects of climate change or new pests on crop yields, and
- uncertainty in the discount rate (used for calculating net present value).
These uncertainties can be estimated and propagated though to the site acquisition cost via sensitivity analysis or other uncertainty propagation methods. They are likely to produce large uncertainty intervals for longer-term estimates, unless an active cropland real-estate market shows stable long-term prices. If such a real-estate market is absent, markets values in other countries and regions could be used as surrogates, at least to provide a reality check on estimates for site-acquisition costs based on Yellow Sea region information. One challenge of the proposed work will be developing ways to present uncertainty from various sources in cost-benefit results to allow decision makers to make judgements considering the uncertainties. The proposed work may also help reduce the uncertainties, as input data are assembled and checked and as evaluation tools are refined.
3.1.2 Former cropland site-preparation costs
These will be the typical site preparation costs for a given end use, broadly defined. Typical ranges for these costs can be obtained from local construction and development companies, which must routinely estimate them. For building construction, it would include installation of roads, drainage, sewers, and other utilities. For aquaculture facilities construction, it would include any site work preparatory to the actual pond and other facilities installation, which typically would be low on cropland. Therefore, separate estimates will have to be made if the end use is freshwater aquaculture, mariculture, or building construction.
For building construction end uses, it is reasonable to assume that the acquired cropland will not be within a floodplain, which might also be a wetland, since such land would tend to be good for rice cultivation and poor for building construction.
Consideration should be given to potential future increases in costs resulting from stricter storm-water management requirements, which may be tightened compared to some current practices in the region.
3.1.3 Former cropland site-maintenance costs
In general, cropland provides a baseline case for site acquisition, preparation, and maintenance costs. Since site-maintenance costs are highly variable depending on use, the best approach may be to use relative site-maintenance costs by only estimating hilly land and former seashore area site-maintenance costs when they differ from former cropland site-maintenance costs. However, for aquaculture on former croplands in floodplains, any flood insurance or flood protection (dikes, seawalls) costs would have to be considered when comparing to other greenfield-site maintenance costs.
3.1.4 Cropland greenfields external costs
Except for some special cases, such as cranes wintering on rice fields in Cheorwon, Korea or construction that would impede floodwater flows, the external costs of cropland construction sites may be assumed to be zero; in other words, assumed to be included in the site-acquisition cost and so placed on developer balance sheets (internal costs).
Storm-water related external costs or benefits -- such as erosion, pollution, and increased runoff -- may result from conversion of cropland to aquaculture or urban land. Typical pest control, erosion control, and storm-water management practices used before and after the conversion will determine whether a cost or benefit occurs, and its value. This in turn will depend on local rules and methods in agriculture and civil engineering.
Changes in greenhouse gases (carbon dioxide, methane, etc.) uptake or release resulting from conversion of cropland to other uses need to be quantified and considered, if significant.
At least for initial work, it may be reasonable to assume the external costs of cropland greenfield sites are zero, recognizing that this will not be true in many particular cases or localities.
3.2 Hilly land greenfield construction sites
3.2.1 Site acquisition and preparation costs.
The easiest approach here may be to assemble a database of the site acquisition and preparation costs for facilities recently constructed on hilly land, such as residential developments, other buildings, ski resorts, and mountaintop golf courses. At least in the Republic of Korea, this may provide enough information to make a general model for cost estimating, which could then be modified for other countries in the region (different labor costs, etc.) By contrast, use of market prices for site-acquisition costs may be difficult due to widespread public ownership and local variation in hilly land. The present value of net income from all future logging yields could also be used to estimate site-acquisition costs, subject to the uncertainties discussed under Section 3.1.1, Cropland site-acquisition costs.
One should assume that the hilly land used will be foothills or other small hills along existing transportation corridors, and not large mountain ranges in remote areas or signature peaks with high cultural value. (See also Section 3.2.3, Hilly-land greenfields external costs, below.) For development on hilly land adjacent to existing urban areas or transportation corridors, the site-acquisition costs may be relatively low; however, the site-preparation costs will be higher.
Special site-preparation costs, compared to cropland, include:
- road construction on hilly land,
- grading building sites and parking areas -- such as terracing slopes and leveling ridges,
- additional erosion control and slope stabilization (landslide prevention),
- forest-fire prevention (special clearing and landscaping),
- additional storm-water treatment measures appropriate for discharges into smaller hilly-land streams, and
- water supply (higher pump and motor costs).
3.2.2 Hilly land site-maintenance costs
Special site-maintenance costs, compared to cropland greenfield construction sites, include:
- added fuel and maintenance costs to drive vehicles up and down the hilly land,
- additional snow clearing and ice control to address slippery steeper slopes,
- perhaps additional transportation accident rates on steep slopes, and
- water supply (higher pumping costs).
3.2.3 Hilly-land greenfield construction external costs
A high value is placed on mountains in many religions with long histories in the Yellow Sea area. Many gravesites are located on hills or mountains, and so are many Buddhist temples and other sites of worship. Many universities are also located on the edges of mountains or foothills, including China Ocean University, Qingdao University, Seoul National University, Sogang University, Yonsei University, etc. Many parks are also located in mountains, such as Laoshan, Namsan, Seoraksan, Zhongshan, etc. Conceptions of mountains as places of spiritual and natural purity as well as intellectual achievement, especially compared to wet and muddy coastal areas and the perceived menial lives of fishers and shellfish gathers & trappers, has probably been a major factor behind the perceived worthlessness of mudflats, supporting efforts at their reclamation.
Historical fortresses are located on some mountains and hills in the region. The Korean word SanSeong (산성, 山城) means mountain fortress. Examples in Korea include NamHanSanSeong (남한산선) southeast of Seoul, BukHanSanSeong (북한산선) north of Seoul, and BuSoSanSeong (부소산성) north of BuYeo (부여), the location of the former BaekJe (백제) Kingdom capitol. In addition to stone walls, these mountain fortresses included structures for storage and lodging. As is appropriate, mountains with such valuable historical features are preserved as parks. However, these mountain fortresses demonstrate that methods and technology for building large structures and access roads on hills and small mountains in the region have been available for well over 1,000 years.
A model of hilly-land site-acquisition costs based on recently constructed facilities, the approach suggested above, may provide insights on costs of preserving, relocating, or restoring culturally valuable structures and objects on hilly land or other culturally valuable aspects of hilly land. For instance, current practices for avoiding or relocating gravesites may be documented via this effort. There is a large supply of hilly land in the Yellow Sea region, which may allow using some of it as greenfield construction sites, while avoiding culturally important hills and leaving some hills as green space within urban areas.
From an ecological perspective, hilly and mountainous land in the Yellow Sea region is the most common type of preserved or undisturbed land. Numerous parks are located in mountainous areas of the region. Hilly land in the region is not a rare habitat type, though deforestation has been and remains a periodic problem in different times and places. Care should also be taken not to fragment existing larger natural areas over which larger mammals might range.
Changes in greenhouse gases uptake or release resulting from conversion of hilly land to other uses also need to be quantified and considered, if significant.
3.3 Seashore-area greenfield construction sites
3.3.1 Site acquisition and preparation costs.
Perhaps even more so than hilly land, the site acquisition costs of seashore areas are low, since areas below the high-tide water line are typically in public ownership and have been provided to developers at little or no cost. Most of the site costs for seashore areas result from site-preparation expenditures. In practice, some amount of compensation is often paid to waterfront land owners -- including harbor and marina operators -- as well as commercial fishers and shell fishers, and sometimes to other parties, and this compensation could be considered a site-acquisition cost.
Potential site acquisition and preparation costs will depend on whether the end-use is mariculture, other agriculture, or building construction. Here are some examples; a separate list should be developed for mariculture end-uses:
- obtaining waterfront access,
- purchasing waterfront property or riparian rights,
- compensation paid to various parties affected by the reclamation,
- any restoration costs -- for building marinas, constructed wetlands, etc. outside the reclaimed area,
- installation of seawalls, dikes, or other means to isolate a seashore area from tides, waves, and storm surges,
- removal of sediments unsuitable for construction and installation & compaction of fill material,
- installing deeper building footings in the reclaimed area, if needed,
- special provisions for storm-water drainage from low, potentially below sea-level, areas, including possibly pumping systems, such as those in place in New Orleans,
- special provisions to ensure that changes in river or storm-water flow patterns do not cause salt-water intrusion into local ground water.
- special provisions for wastewater disposal from low areas (lift stations, etc.), and
- in cases where freshwater-lake creation is attempted in the former seashore areas -- watershed water-quality improvement efforts to maintain water quality after the flushing effects of marine tides are stopped. Some judgement is required here because some of these actions, such as improved wastewater treatment prior to discharge into rivers, might have been taken absent a reclamation or seawall construction effort.
3.3.2 Seashore-area site-maintenance costs
Special site-maintenance costs, compared to cropland greenfield construction sites, include:
- maintenance of seawalls or other barriers,
- annualized costs for future improvement of seawalls to address rising sea levels and increased storm severity, both of which climate change models and insurance company models are now predicting,
- energy and maintenance costs for handling storm water and wastewater from low areas (pumping, etc.), and
- flood insurance, if needed.
3.3.3 Seashore-area greenfield construction external costs
The external costs of intertidal land reclamation are discussed in Endo (2008), Moores et al. (2008), and Bewers (2007); however, none of these appear to provide a complete list. The list below is probably also not complete, or may include some insignificant items. Better quantifying external costs of Yellow Sea region greenfield construction site options would be one outcome of the as-built cost-benefit analysis proposed here.
Here is an initial list of items to evaluate for as-built economic analysis of external costs and benefits of seashore-area greenfields:
- direct revenue from wild seafood harvests, namely fishing and shellfish collection, in the former seashore areas,
- indirect revenue from nearby coastal waters, the Yellow Sea as a whole, and surrounding seas from declines in fish and shellfish populations that either (A) relied on the biological primary productivity of the former seashore areas or (B) relied on the former seashore areas for some portion of their life cycle (such as spawning),
- traditional fishing activities (such as Korean women divers, Haenyeo, often featured in Korean news media and guidebooks, see for instance Korea Times, The 2009.09.03) and related tourism revenues,
- recreational fishing (or bird hunting) opportunities and related tourism revenues (bait and tackle shops, guides, charter boats, hotels, groceries, beer and liquor, etc.),
- bird watching and related tourism revenues,
- water sports (swimming, SCUBA, sailing, surfing, windsurfing, jet-skiing, etc.),
- coast-dependent sight-seeing,
- water-front land (parks, luxury home sites, etc.),
- educational activities and scientific research,
- reduced potential for pharmaceutical and other natural products chemistry discovery due to loss of biodiversity,
- other consequences of biodiversity reduction -- such as greater susceptibility to invasive species,
- loss of water-pollution reduction where polluted waters flowed though coastal wetlands prior to reaching the Yellow Sea,
- effects on wetlands (and wetland functions, such as protecting coasts from storms) outside the reclamation area due to changes in water-flow patterns and sediment deposition locations,
- changes in greenhouse gases (carbon dioxide, methane, etc.) uptake or release resulting from conversion of seashore areas to other uses (markets for carbon dioxide-equivalent emissions are actively developing),
- brand equity (Many hotels, restaurants, and packaged goods use fish or bird names or images in their brand names or marks. Scenic habitat is also used as a setting for many advertisements. This reflects cultural value.),
- national image (This is a public equivalent of brand equity; consider the public perception effects of the algae bloom near Qingdao a month or so prior to the 2008 Olympic sailing events there.)
- emergency services and evacuation costs in the event of flooding or threatened flooding, to the extent these are not internalized via flood insurance or taxes for emergency services. [added 2010.03.22]
If one has doubts about the tourism potential of some of the above activities in the Yellow Sea region, consider how quickly snowboarding took off in the Republic of Korea over the last decade and the warm embrace of sailing by Qingdao. Broad increases in personal and family wealth will likely lead to increased expenditures on leisure and tourism activities in the region.
4. Concluding Summary
The conceptual framework above shows the complexity of accurately understanding the internal and external costs and benefits of contemporary greenfield construction sites in the Yellow Sea region. Achieving this goal would require a major effort, time, and expense. However, in the past 20 years alone, enormous resources (the equivalent of billions of today's U.S. dollars) in direct costs have been spent constructing seawalls, installing fill, and converting intertidal mudflats to other uses. Much of this has been funded by taxpayers, either directly or through tax incentives or other mechanisms. External costs and benefits have yet to be quantified; however, their gross values probably exceed the direct costs. Migratory birds from Alaska to Australia pass through the Yellow Sea region (Moores et al. 2008). Current fishing and mariculture revenues as well as a vast future tourism potential and the international image of Yellow Sea region are at stake. So, the effort of a thorough economic analysis that could aid future decisions seems worthwhile.
Joint Chinese and Korean leadership of such a project is indispensable. Chinese and Korean experts are better positioned to gain access to information, often written only in Korean or Chinese, including planning and budgeting documents of developers of various types of greenfield sites. In cases where developer confidentiality is a concern, local experts could review documents of numerous developers under confidentially agreements, and abstract general economic information for analysis and publication. As Section 1.2, Purpose, points out, participation of scholars or engineering practitioners from other regions could help incorporate information from ongoing, long-term clean-water efforts in the USA or Europe into the analyses.
Databases of cost information from the proposed analysis should be made publicly available. Publication of results in Chinese and Korean would help them reach a broader audience of decision makers in the Yellow Sea region. Publication in English is also worthwhile to make the results more generally available.
Uncertainty will need to be carefully quantified, and may limit the utility of the results. However, even if uncertainties and unavailable data produce cost-benefit analysis results that are only crude aids to decision-making, relative comparisons may still be possible. In addition, simpler methods for evaluating greenfield construction sites may be developed via the proposed economic analysis. Examples include:
- coastline length and quality – the length and quality of coastline created or destroyed by a reclamation project may have a strong influence on its costs and benefits. Creating an island by installing fill on a sea bottom area with relatively low biological productivity and diversity and in an area that is far enough away from existing coastal features like sandbars, mudflats, reefs, etc. to avoid damaging them by changes in currents, water quality, etc. – and thereby increasing the amount of coastline without destroying or degrading existing coastline – may fare better in a cost-benefit analysis than projects that build seawalls between two headlands and then convert the isolated bays or estuaries to other uses. Such bay or estuary reclamation projects replace a coastline formed by centuries or millennia of biogeochemical processes with a shorter, recently constructed coastline. If as-built economic analysis of reclamation projects indicates that coastline length and quality is correlated with project total costs and benefits, a coastline-effects index may provide a quicker tool for evaluating reclamation projects.
- cropland baseline – this would describe some minimum performance characteristics, such as yields, that local croplands would have to produce before they make worse greenfield construction sites than seashore areas based on total costs and benefits (subject to the uncertainties discussed above in Section 3.1.1 Cropland site-acquisition costs), and
- competitive hilly land characteristics – identifying characteristics of hilly land that would make such hilly land provide better greenfield construction sites than the above cropland baseline.
The limitations of such simpler, surrogate, methods would have to be carefully documented.
5. Annotated References
Bang Tae-Jin, 2003, Case Study on the Integrated Coastal Policy of the Republic of Korea, PEMSEA Technical Report No. 8, Quezon City, Philippines: Global Environment Facility/United Nations Development Programme/International Maritime Organization (GEF/UNDP/IMO) Regional Programme on Building Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), http://pemsea.org/publications/coastal-and-ocean-governance.
Barter, Mark, 2002, Shorebirds of the Yellow Sea: Importance, threats and conservation status, Wetlands International Global Series 9, International Wader Studies 12, Canberra, Australia: Wetlands International -- Oceania Office, ISBN 90 5882 009 2, available from http://www.environment.gov.au/biodiversity/migratory/publications/yellow-sea/index.html.
Bewers, J. M., 2007, Transboundary Diagnostic Analysis for the Yellow Sea LME: Reducing Environmental Stress in the Yellow Sea Large Marine Ecosystem, Ansan, Republic of Korea: UNDP/GEF Project entitled “Reducing Environmental Stress in the Yellow Sea Large Marine Ecosystem” (YSLME Project), http://yslme.org/pub/pdf/Yellow%20sea%20TDA.pdf.
Birds Korea, 2009.03.24, "Large-scale Wetland Reclamation of Song Do Tidal-flat Approved", http://www.birdskorea.org/Habitats/Wetlands/Songdo/BK-HA-Songdo-Tidal-flat-reclamation-2009-03.shtml.
China Daily, 2008.06.25 07:55, "Marine economy surging in Qingdao" by Zhao Ruixue, Special Supplement, http://www.chinadaily.com.cn/cndy/2008-06/25/content_6792473.htm.
[Selected quote...] "Zhang Yuanfu, vice-mayor of Qingdao, [...] predicted that total revenues from marine economy - including fishing, aquatic cultivation, offshore oil, shipping, shipbuilding and marine environmental protection - will reach 127 billion yuan this year."
China Daily, 2008.03.20 07:35, "Qingdao embracing more of Jiaozhou Bay" by Zhao Ruixue, p. 24, http://www.chinadaily.com.cn/cndy/2008-03/20/content_6551029.htm.
[Selected quote...] "Studies by the Qingdao Municipal Development and Reform Commission show that more than 400 sq km - now mostly covered by shallow sea, wetlands and saline marshes - can be reclaimed and developed. Plans call for an eco-coastline along the bay with seven development zones for different business sectors, including conferences and exhibitions in Hongdao, logistics in Huangdao and sites for company headquarters in Sifang and Licang districts."
China Daily, 2005.05.26 05:38, "Coastal regions 'expand' into sea" by Xie Chuanjiao in Qingdao and Wang Ying in Beijing (China Daily), p. 1, http://www.chinadaily.com.cn/english/doc/2005-05/26/content_445874.htm.
Endo, Isao, 2008, July, Guideline for Economic Analyses of Environmental Management Actions for the Yellow Sea, Ansan, Republic of Korea: UNDP/GEF YSLME Project, http://www.yslme.org/pub/pdf/econ%20guide_final.pdf.
Gu D., Zhang Y., Fu J., Zhang X., 2007, "The landscape pattern characteristics of coastal wetlands in Jiaozhou Bay under the impact of human activities" Environ Monit Assess, 124, pp. 361-70, http://dx.doi.org/10.1007/s10661-006-9232-7 or http://www.springerlink.com/content/rn1506707220012k/
JoongAng Daily, 2010.01.30, "New $18 billion city is planned for southwest" by Ser Myo-ja, http://joongangdaily.joins.com/article/view.asp?aid=2915991.
Korea Times, The, 2008.09.11 19:10 (2008.09.12 print edition, p. 20), "Songdo: A Mega City Redefining 'Green'" by Jane Han, http://www.koreatimes.co.kr/www/news/biz/2008/12/123_30964.html.
[Selected quote, the first three paragraphs...] "Built on mudflats along the Yellow Sea at Incheon, the $35 billion New Songdo City, the largest private real estate venture in history, is awe-inspiring for its size alone. But what's more amazing is that the entire city, as big as Boston, will be constructed on green technology. The U.S. Green Building Council (USGBC), a non-profit group promoting sustainable building practice, has named the 1,500-acre [6 square kilometers] development 35 miles [56 km] southwest of Seoul a LEED-ND pilot program. LEED-ND stands for Leadership in Energy and Environmental Design for Neighborhood Development, and it is a green buildings rating and certification system."
Korea Times, The, 2008.09.03 19:37, "Women Divers an Intangible Heritage" by Kang Shin-who, http://www.koreatimes.co.kr/www/news/special/2008/09/139_30533.html.
Moores N., Kim S-K, Park S-B, and Sadayoshi T. (editors), 2001, Yellow Sea Ecoregion: Reconnaissance Report on Identification of Important Wetland and Marine Areas for Biodiversity, Volume 2: South Korea, Busan, Korea: Wetlands & Birds Korea and WWF-Japan.
Moores N., Rogers D., Kim R-H., Hassell C., Gosbell K., Kim S-A, and Park M-N., 2008, October, The 2006-2008 Saemangeum Shorebird Monitoring Program Report, Busan, Korea: Birds Korea and Australasian Wader Studies Group, http://www.birdskorea.org/Habitats/Wetlands/Saemangeum/Downloads/Birds-Korea-SSMP-Report-2006-2008.pdf.
[All text in both Korean and English.]
Yu Huming and Ruan Chunlin, 2003, The development of national coastal and marine policies in the People’s Republic of China: a case study, PEMSEA Technical Report No. 7, Quezon City, Philippines: GEF/UNDP/IMO Regional Programme on Building Partnerships in Environmental Management for the Seas of East Asia (PEMSEA), http://pemsea.org/publications/coastal-and-ocean-governance.
Yuan, J. et al., 2001, Yellow Sea Ecoregion: Reconnaissance Report on Identification of Important Wetland and Marine Areas for Biodiversity, Volume 2: China, WWF-Japan, Wetlands International - China, and Wetlands & Birds Korea.