.r
U r-..
_ -

 

Llnha TY

M'Cmgan State
University

 

 

 

This is to certify that the
thesis entitled

COST-BENEF IT ANALYSIS OF MEI-NONG DAM
PROJECT: A CASE STUDY

presented by

YUAN YAO LEE

has been accepted towards fulfillment
of the requirements for the

Science and Resource Studies

 

 

Master of degree [l / Community Agricultural Recreation

’I’.’
.-
I..-"

Majrrofessor’s Signature
[WW/0,7

Date

 

MSU is an Affirmative Action/Equal Opportunity Employer

- -—a—--.-n-.-u-.--.-----.-u-o-

 

PLACE IN RETURN BOX to remove this checkout from your record.
TO AVOID FINES return on or before date due.
MAY BE RECALLED with earlier due date if requested.

 

DATE DUE DATE DUE DATE DUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5/08 K:/Proj/Acc&Pres/ClRC/Dateoue.indd

 

COST-BENEFIT ANALYSIS OF MEI-NONG DAM PROJECT: A CASE STUDY
By

Yuan Yao Lee

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF SCIENCE
Community Agricultural Recreation and Resource Studies

2009

ABSTRACT
Cost-Benefit Analysis of the Mei-Nong Dam Project: A Case Study
By
Yuan Yao Lee
The question of whether hydro-electric or irrigation dam projects are an efficient,
long-term option in managing public water resources is increasingly controversial.
Although dams serve many functions, they also drastically change the hydrological
landscape, leading to significant environmental and social impacts. Therefore, sound
investigation and objective analysis are needed to identify real cost and estimate future
benefits. However, dam feasibility studies are usually limited for many reasons, and
analyses and results do not necessarily reflect real impacts. Several issues impede a
realistic Cost-Benefit Analysis (CBA) of dam projects, including 1) the complexity of
factors, 2) the influence of temporal factors on future benefits and cost, and 3) the
existence of uncertainty. Consequently, these factors often lead to estimates that are
overly optimistic. This study aims to address these issues by identifying the potential
effects of dam, estimating their monetary value, and discounting cost and benefits to
present time values. Furthermore, sensitivity analysis is applied to recognize the potential
effects of uncertainty. In this case study, the Net Present Value (N PV), using a 6 percent
discount rate, of the Mei-Nong Dam (MND) in Taiwan is estimated to be a negative
15.778 billion New Taiwan Dollar (NTD) Further analysis indicates that the Internal Rate
of Return (IRR), the interest rate at which the cost of a public investment results in a
positive benefit, is estimated at 3.49% which is lower than interest rate (6%) in 1992.

These results suggest that the project is undesirable and should not be carried out.

ACKNOWLEDGEMENTS

I am grateful for the support from many people while I completed this thesis. I am
especially indebted to my mother and father who always gave me the most encouragement
and love, and my grandfather who unconditionally assisted me to pursue my dream. I am also
thankful for the support that my sister, Yuan Ting, provided while I studied away from home.

I would like to thank my advisor, Dr. Gerhardes Schultink, for his guidance and
support on my thesis and my graduate life. It was my pleasure to be his advisee. I also want
to recognize those remarkable supports from who has granted me the most precious
knowledge. Thank Dr. Eric Crawford and Dr. Robert Richardson for their significant
comments and advices on my thesis, Dr. Tawa Sina give me the strength to let me complete
this thesis.

I deeply appreciate the support and concern that my fiiends, Ying Hsuan Lin, Eric
Kuo and Yi I-Isun gave to me. You are the main reason I am still here and I finally achieve
this tough goal. I also want to thanks for the support from Chia Wei Chao, Yu I-Isiang Wang,
Clair Chiang, Andy Tsai, Jamie Wu, Yu Mei Tsai, Allen Tse, Chen Teng and Wei Ying Wu.

All of your company, support, and friendship I will always cherish.

TABLE OF CONTENTS

LIST OF TABLES ............................................................................ vi

LIST OF FIGURES .......................................................................... vii

CHAPTER I

INTRODUCTION ............................................................................. 1
Problem Statement 1
Study Background ..................................................................... 2

CHAPTER II

LITERATURE REVIEW .................................................................... 4
Positive Impacts ofDams 4
Impacts of Dams on Society ........................................................... 5
Impacts of Dams on Envrronment 7
Relevant Research in Taiwan ......................................................... 9
Cost-Benefit Analysis .................................................................. 1 1
Structure of CBA ........................................................................... 12
Reason To Use CBA ................................................................... 14
Extemality .............................................................................. 14
Discount Future Events ............................................................... 15
Summary ................................................................................ 17

CHAPTER III

CASE STUDY: MEI-NONG DAM PROJECT .......................................... 19
Socio-Economic and Environmental Status ......................................... 19
Purpose of Mei-Nong Darn Project .................................................. 22
Potential Impacts of MN D ............................................................. 24

CHAPTER IV

ANALYTICAL METHOD .................................................................. 28
Valuation of the Dam Project .......................................................... 28
Measure Benefits and Costs 29
Discount Factor ......................................................................... 33
Sensitivity Analysis .................................................................... 34
Data Collection ......................................................................... 36

CHAPTER V

RESULTS AND DISCUSSION ........................................................... 37
Benefits of MND Project .............................................................. 37
Costs of MND Project ................................................................. 44
Discussion of Results ................................................................... 47
Sensitivity Analysis .................................................................... 51

iv

CHAPTER VI

CONCULSIONS AND SUGGESTIONS ................................................ 53
Conclusions ............................................................................. 53
Limitation of the Study ................................................................ 54
Suggestions .............................................................................. 55

APPENDICES ................................................................................ 58
Appendix 1: Economic Analysis of MND (6% Discount Rate) .................. 59
Appendix 2: Scenario 1 ............................................................... 64
Appendix 3: Scenario 2 ............................................................... 69
Appendix 4: Scenario 3 ............................................................... 74

REFERENCES .............................................................................. 79

Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8

Table 9

Table 10

Table 11

LIST OF TABLES

Positive and Negative Impacts of Dams .................................... 9
Valuation Methods for Impacts of Dam Construction. 30
Consumer Price Index and Adjustment Factors ............................ 34
Benefits Provided by Ecosystem Services .................................... 39
Income From Sold Water ...................................................... 40
Income from Sold Power and Saving From Clean Water ................. 42
Construction Costs of Water System .......................................... 45
Construction of Power System ............................................... 46
Maintenance, Replacement and Operation Costs .......................... 48
NPV of the MND Project at variable Discount Rates ..................... 50
Sensitivity Analysis of the MND Project .................................... 52

vi

LIST OF FIGURES

Figure 1 Map of Kaohsiung City ...................................................... 20

Figure 2 Estimated Increase of Water Demand in Kaohsiung City ............... 23

vii

CHAPTER I: INTRODUCTION

Dams have been used to manage water resources for a long time. Although large
irrigation and hydro-electric dam proj ects can effectively stimulate economic
development, and specifically increase performance of the agricultural, manufacturing
and tourism sectors, many negative dam impacts are easily ignored. Increasingly various
environmental groups, government institutions and the public-at-large are beginning to
question their real long-term public utility. Some countries such as Taiwan, still focus on
the positive effects of dams and keep using them to address water and energy needs. This
clearly shows the rationale for a more objective project evaluation that involves all
stakeholders’ concerns as well as comprehensive project impacts.

The official assessment for the MND project is a classical case that ignored
comprehensive dam impacts. Most intangible impacts were glanced over without further
analyses or evaluations, and most opinions of those possibly affected were not taken into
consideration. As a result, an over-optimistic and limited report was presented without
considering some possible societal impacts. To prevent this biased evaluation, this study
re-evaluates the overall impacts of the dam on society by applying an extended cost-
benefit analysis (CBA). It includes more comprehensive impacts of the dam and by the
application of extended CBA seeks to provide better information for the public decision
making and the selection of dam construction alternatives.

1. Problem Statement

The question of how to evaluate the potential impacts of dams is always a

complicated issue. There are many direct and indirect factors to consider and the impacts

of these factors and their economic value is difficult to quantify. For many of the non-

market goods and services associated with dam projects no value or price exists, because
they are not formally traded in the market place. Therefore, many evaluations of public
dam projects focus on the tangible expenditures and incomes, and may define the dam as
a public necessity with positive net benefits. In addition, these assessments fail to account
for the uncertainties (e. g. the long-term capacity of the dam reservoir that may be reduced
by increased sedimentation rates due to lack of soil conservation practices) and risk (e. g.
the possibility of dam failure as a result of earth quakes), both reducing the validity of
benefit estimation.

These concerns are especially important for dam projects with an estimated long
project time. For example, almost all dams in Taiwan have not achieved their best
performance due to sedimentation problems while the negative impacts still exist (Cheng,
2004). Unfortunately, project analyses often put little emphasis on this issue and lead to a
mistaken expectation on dam performance when significant uncertainties are
misrepresented. By disregarding these issues, the assessment results become overly
optimistic and undesirable. Therefore, it is necessary to provide a closer review of the
MND project to ensure that it will indeed bring more benefits to society than costs.

2. Stuojr Background

Limited access to water resources is a critical restriction to economic
development and industrial output in Taiwan. Even though typhoons and monsoons
generate large amounts of precipitation each year, Taiwan’s mountainous geography
makes it difficult to retain water. To effectively utilize water, more than a hundred dams
have been constructed and approximately 12% of Taiwan is covered by reservoirs (Cheng,

2004). In the early 19905, Taiwan planned the construction of another large dam, the

Mei-Nong Dam (MND) on the Lau-Nong River, to prevent water loss by run-off and
provide water for irrigation and industrial growth. The construction for the MND project
was completed in seven years and sold sell water to Kaohsiung for industrial and
municipal use. Although the Taiwanese government claimed the project as multi-purpose
and environmentally friendly (WRA, 1984), the dam project significantly altered the
landscape and prevents people from accessing natural resources. These drastic changes
not only affected local people’s lives, but also lead to the displacement and/or extinction
of many species over a wide geographical area, primarily within the watershed. Since the
dam bring both positive and negative impacts, whether the project should have been
executed should depend on an integrated investigation and evaluation.

In Chapter II, previous research and studies related to the dams advantages and
disadvantages are presented. The principle indices of CBA and the selection of a proper
discount rate are also discussed in this chapter. Chapter III describes the MN D project
area and provides background information including the history, the purpose of MND
project and the potential impacts. The analysis method and the results presentation are
discussed in Chapter IV and V. Chapter VI provides a conclusion about the feasibility of

MND and suggestion for more efficient water management.

CHAPTER II: LITERATURE REVIEW

This Chapter focuses on the impacts of dam projects and how they affect the
environment and people. Using information provided by a series of thematic reviews
conducted by the World Commission on Dams (WCD), dams all over the world, as well
as relevant research in Taiwan, provided the boundaries for this analysis. This chapter
also discusses the application of cost-benefit analysis by taking another look at its basic
principles and criteria used to judge the acceptability of a project. Consequently, this
chapter also examines why CBA is important in project evaluation and reviews scholarly
opinions regarding its pros and cons (Adler, 2006; Boardman, et al., 2001; Hanley &
Spash, 1993).

Last but not least, the final part of this chapter emphasizes the selection of
discount factors. The methods by which the discount factor is chosen as well as the issue
of whether future events should even be discounted all directly influence the credibility
of CBA. A close review of the Opinions of scholars from different perspectives is needed
in order to ensure the best outcome for the study site.

1. Positive Impacts of Dams

One of the fundamental requirements for socio-economic development is the
availability of water of appropriate quality. Historically, the main sources of domestic and
industrial water are aquifers or rivers (Adams, 2000; Wang, 2003). Today, many of these
sources are overused and no longer provide a consistent supply. Consequently, other
options such as reservoirs are pursued to satisfy the demand for water. The reservoirs

formed by dams can effectively collect rainfall during wet seasons for use dm'ing periods

of drought. This is especially critical in arid regions of the world (Adams, 2000; ICOLD,

1999)

In addition to providing clean water, dam projects can also provide multiple
benefits. First, dams can adjust the river flow and prevent flooding downstream, reducing
the loss to people’s properties and assets. Second, the cascade created can be used to
generate power. Moreover, the newly created reservoir can provide a setting for various
recreational activities such as fishing, boating, jogging, hiking, or camping (ICOLD,
1999)

Additionally, some positive extemalities but not easily observed are also
considered as the benefits. For instance, hydropower reduces the emission of greenhouse
gas emission and lowers the concentration of carbon dioxide in the atmosphere. It is the
multipurpose appeal that makes dams a popular option for water and energy management
policies (ICOLD, 1999). One famous example is the abundant power provided by the
Three Gorges Dam in southwestern China. This huge dam provides massive amounts of
power for industry and improves the standard of living of its local residents (Cheng, 2004;
ICOLD, 1999; Pong, 1994; Morimoto, 2004).

2. Impact of Dams on Society

Although dams are often seen as an effective tool for national economic
development, their macroeconomic benefits tend to be highlighted while their local
economic and social consequences ofien remain inadequately evaluated. The thematic
reviews of the World Commission on Dams (WCD) point out that the emergence of large
dams has drastically changed the landscapes within the watershed and poses serious
problems to both society and the environment (Adams, 2000; Bartolome, et al., 2000).

Rosenberg’s review on dams in Canada concludes that while local residents may

benefit from some developments, dams often cause serious interruptions to activities such
as harvesting, hunting, and fishing, and consequently, the livelihoods of many of these
people (Rosenberg, et al., 1995). Additionally, the construction of large dams has
inevitably resulted in the displacement and resettlement of several millions of people
across the world.

While a number of those dams may appear to have achieved their main goals,
such as the provision of hydro-electricity or irrigation, they have also caused severe
socio-economic hardship for those forced to move (Bartolome & Danklmaier, 1999).
These displaced persons experience higher levels of homelessness, unemployment, debt,
and hunger (Adams, 2000; Bartolome, et al., 2000).

Dams do not just have consequences for people living upstream. Adverse effects
of dams also take place downstream. The riverside communities who rely on the natural
resources provided by the rivers are also affected to varying degrees by altered river
flows and ecosystem degradation. A great number of residents use the water from the
rivers to irrigate their farms. A dam would limit their access to water and other resources
(Berkarnp, et al., 2000; Wang, 2003).

In addition to the changes in the landscape of the watershed, dams pose a serious
threat to the success of cultural heritage. For example, the Three Gorges Dam in China
inundated the large number of historical and cultural sites within Si-Chun province, and
consequently led to a huge loss in recreational value (WCD, 2000). However, those who

are most adversely affected often remain ignored (Pong, 1994; Wang, 2003; WCD, 2000).

3. Impacts of Dams on Environment

Society and the environment are very closely related; a change in one can cause a
change in the other. Studies have indicated that dams dramatically change the
environment upstream, downstream, in the floodplain, delta, and even in the coastal
regions (ADB, 2002; WCD, 2000; IDRC, 2001). These changes usually lead to loss of
flora and fauna and interrupt the natural balance of the ecosystem.

During the dam’s construction, a reservoir is created and turns the terrestrial
ecosystem upstream into lake. Large-scale impoundment eliminates unique wildlife
habitats and leads to the extinction and/or displacement of species which used to live in
this ecosystem (Berkamp, et al., 2000; Nilsson & Dynesius, 1994; WRA, 1984).

Dams also significantly change the ecosystem downstream by altering the river
flow. Since the temperature and nutrient concentrations change with the river flow
volume, aquatic creatures are significantly affected by any change in the flow pattern. For
example, the construction of the Glen Canyon Dam on the Colorado River reduced daily
average flows during the annual September peak from about 2000 m3/sec to 700 m3/s
(Berkamp, et al., 2000; WCD, 2000). This change in flow has fundamentally altered the
water temperature, threatening the livelihood of some aquatic creatures.

Additionally, the fluctuation of sediment and nutrient concentration within the
watershed alter the aquatic animals and reduce their population (ICOLD, 1999; WCD,
2000). A reduction in sediment moving downstream from the dam invariably results in an
increased rate of erosion to the coastal deltas. The slow accretion of the Nile Delta was
reversed with the construction of the Delta barrage in 1868. Today, other dams on the

Nile, including the Aswan High Dam, have further reduced the amount of sediment

reaching the delta. As a result, much of the delta coastline is eroding by up to 5-8 meters
per year (WCD, 2000).

However, it is not just the presence of the dam that damages the environment; the
physical impact by transmission cords and access roads during construction are ofien
overlooked. Roads leading to the dam increase the depletion of natural resource by
providing passage to previously remote areas to settlers and hunters. By clearing land and
changing the habitat, access roads disrupt the lives of animals in the watershed affected.
Its effects are even more acutely felt during crucial developmental periods in the life
cycle such as calving, mating, and gestation (WCD, 2000).

In addition, the installation of power transmission lines, through the use of
chemical substances, pollutes the dam site. In order to set up the power cords, Shrubs and
trees are typically cleared off by cutting or herbicides. The residual herbicide will either
penetrate into groundwater aquifers or discharge into runoff and flow into the rivers. The
polluted body of water consequently results in the death of aquatic creatures and even
causes health problems in people (WCD, 2000).

Last but not least, while the combustion of coal, oil, or natural gas in thermal
power plants yields mainly carbon dioxide (C02), bacterial decomposition (both aerobic
and anaerobic) of organic matter and other processes in tropical water reservoirs produces
both C02 and methane (CH4). An increase of methane in the atmosphere will lead to
more serious greenhouse effects (Rosa & dos Santos, 2000). Table 1 describes the

potential impacts based on experience from different dam projects around the world.

Table 1 Positive and Negative Impacts of Dams

 

 

Positive Impact Negative Impacts
Social Aspect 0 Provide water and o Displace and Resettle
power indigenous people
Prevent flood o Destroy domestic culture and

Create tourism value

Environmental 0 Replace the thermal

Aspect power plant and reduce
the emission of carbon
dioxide

reduce the recreation value
Prevent access to the river by
indigenous people

Damage the grazing
industries and fishery

Destroy the habitats of animal
Clear the land

Change the temperature and
nutrient contents of the
stream

Block the movement of fish
Emit methane due to the
decomposition of bacteria in
reservoir

Erode the river bank

 

Source: WCD, 2000

4. Relevant Research in Taiwan

Previous research had mainly focused on two categories: 1) the life cycle of dams,

and 2) the potential effects on Taiwan’s environment and society.

Considering that the average annual soil deposit problem, Cheng (2004) indicates

that the average life span of a dam in Taiwan is mainly decided by the soil deposit rate.

Considering that the average annual soil deposit rate, in Taiwan, is between 0.1% and 1%,

the average life is about 70 years.

Pong (1992) tried to use the Contingent Valuation Method (CVM)l to estimate the

 

I . . . . .
The Contingent Valuation Method 15 survey-based and estimates people’s Intended future

behavior in constructed markets. Through an appropriately designed questionnaire, a hypothetical
market is described where the good in question can be traded at an estimated price.

opportunity cost2 of the MND project’s selected site. Based on her study, the willingness
to accept compensation (WTA)3 for constructing the dam project, or opportunity cost, is

899.4 New Taiwan Dollars (NTD)4 per person every month. The population of Mei-Nong
Township is approximately fifty thousand, and therefore the opportunity cost for the dam
project will be 54 million NTD, around 1.8 million USD, per year by multiplying the
WTA to the population of Mei-Nong town.

Despite the social and environmental effects, Wang (2003), in his dissertation
proposal about the social movement opposing the dam project, mentioned that there are
two issues raised by the dam project in Taiwan.

First, Dams designed to deliver irrigation services or other consumption uses have
typically fallen short of physical targets, did not recover their costs, and have been less
profitable in financial terms than expected. As for the dams which were built to deliver
hydropower, they tend to perform close to but still below the target for power generation.

Second, in the past, dam proponents have rarely invited the participation in
decision making. Proponents and opponents alike argue that participation is essential for
democracy, and that participation greatly improves project selection and design. However,
the most affected stakeholders remain excluded from most large scale projects and are
usually informed of the project at the last minute before they were implemented. By

disregarding the opinions of the stakeholders the dam project draws a lot of resistance,

 

Opportunity cost or economic opportunity loss is the value of the next best alternative foregone
as the result of making a decision.

WTA is the amount that a person is willing to accept to abandon a good. It is the minimum

monetary amount required for purchase to be accepted by an individual. WTP, which is the
maximum amount an individual is willing to sacrifice to procure a good.

4
The 2006 exchange rate is approximately 1 US dollar for 30.695 NTD

10

and consequently, a lot of controversy. The earlier the stakeholders step in, the easier a
consensus will take place. It is an essential process to reduce any possible conflict among
stakeholders.

5. Costs-BenefitAnalysis

CBA is an important tool in examining the efficiency of public projects as well as
in the decision making process itself (Adler, 2006; Boardman, et al., 2001; Hanley &
Spash, 1993). CBA was first applied by the US. Army Corps of Engineers, the US.
federal water agencies, and the Bureau of Land Reclamation. In 1936, the Flood Control
Act required the US. Army Corps of Engineers to evaluate the benefits and costs of all
water resource projects. Since then, federal water projects involving public investment
have been required to go under formal economic assessments (Hanley & Spash, 1993).
The use of CBA received increased attention and consequently spread to other countries.
The application of CBA also expanded into the transportation industry, urban planning,
and even heath programs. Nearly all Western countries have widely implemented the use
of CBA as a decision making approach to judge the feasibility of public projects
(Boardman, et al., 2001).

However, the extent of monetary evaluation sometimes has been limited
especially when some non-market benefits and costs present such as environmental
impacts, cultural loss or human health. In order to prevent an inaccurate calculation of
CBA, many international funded projects involving external impacts are required to
incorporate the non-market benefits and costs in the analysis or to undergo additional
non-monetary assessment of these impacts (ADB, 2002; Hanley & Sapsh, 1993; UNEP,

2007)

ll

6. Structure of CBA

Welfare economics assumes that individuals have preferences, and that an
individual’s welfare or utility increases when preferences are satisfied. A project that
benefits one without hindering another is, thus, considered socially desirable (Adler,
2006). However, a project may be accepted if it fulfills the potential Pareto improvement
criteria, which is, as long as the gains are more and can compensate for the losses of
those affected, only then is a project considered feasible to the whole society.

Based on this assumption, CBA is used to decide if a project can contribute to
economic efficiency. In fact, the steps of CBA can be defined based on previous studies:
1) net benefits with or without the project are compared, 2) different alternatives are
compared 3) all possible impacts are expressed in present values and 4) all the impacts
are measured in monetary terms (Belli, 2001, Hanley & Spash, 1993).

Other studies point out that certain steps need to take place in any CBA including:
1) define the project, 2) identify the change of welfare if the project were to proceed or
not, 3) determine the impacts caused by the project, 4) conduct monetary valuation of
relevant effects, 5) compare the project to potential alternatives, 6) assess of the risk and
uncertainty involved, and finally, 7) make a decision based on the selection criterion
(ADB, 2002; Belli, 2001; Hanley & Spash, 1993; UNEP, 2007).

Once the above procedures have been completed, the results are examined to
determine if the project is feasible. Three common measures are used in cost-benefit
, analysis: Net Present Value (NPV), Benefit-Cost ratio (B/C ratio), and Internal Rate of

Return.

Net Present Value WP V). NPV is defined as the total present value (PV) of a time
series of cash flows. It is a standard method for using the time value of money to appraise
long-term project. The NPV has been the most frequently used of all economic measures
of efficiency. NPV can be defined as:

N (Br —Cr)
t=0 (1 + i)’

NPV =

(Source: ADB, 2002)

Where Bt = Benefit at time t; Ct = Cost at time t; i = Discount rate; 11 = Number of years

A project is acceptable to the government if the NPV is larger than zero. Similar
to the B/C ratio, the magnitude of the NPV cannot be used to rank projects, because the
NPV does not provide direct information about the costs of the project.

Benefit-Cost Ratio (B/C ratio). Benefit-cost ratio is an indicator, used in cost-
benefit analysis, which attempts to summarize the overall value for money of a project or
proposal. B/C ratio is the ratio of the benefits of a project or proposal, expressed in

monetary terms, relative to its costs, also expressed in monetary terms. The B/C ratio can

 

 

be defined as:
n Bt
_ 1 "
B/C Ratio= I‘M +1)
n Ct
t=0(1+i)t

(Source: ADB, 2002 )
Where BF Benefit at time t; Ct= Cost at time t; i = Discount rate; n = Number of years

B/C ratio has often been used as a measurement of economic feasibility for

government projects in the water resource field. The B/C ratio shows the ratio between

13

present benefits and present costs. A project is acceptable to the government if the B/C

ratio is equal or higher than one.
Internal Rate of Return (IRR). The IR is the discount rate at which the net
present value is equal to zero. It can be defined as r:

N (Bt —Ct) =
I=o (1+i)’

NPV = O

(Source: ADB, 2002 )
Where Bt = Benefit at time t; Ct = Cost at time t; i = Discount rate; n = Number of years

A project is acceptable if its IRR exceeds some specified interest or discount rate.
In terms of two mutually exclusive projects, this criterion indicates that the project with
the highest IRR should be selected.

7. Reasons to Use CBA

When a project is proposed to the public, the question of how to decide whether
the project should be implemented is always a controversial issue. The decision is often a
difficult one because the project will inevitably involve many aspects and there,
currently, lacks a standard method to evaluate and account for all of them (Boardman, et
aL,2001)

A good way to solve this problem is to evaluate based on market values. Although
the value of many goods or service may not be easily deduced, monetary evaluation is
still a widely accepted method in the decision making process.

8. Externalities
One problem of CBA is that it seldom considers the external effects of a project,

such as the environmental and social effects. It is because several factors, particularly the

14

project’s extemalities, do not have any trading market. Thus, the results of a CBA are
often overly optimistic by ignoring certain intangible costs.

Some practical methods can be applied for different categories of factors. The
valuation methods depend on the nature of each individual factor and the availability of
information. The following are the most common ways used to evaluate non-market
benefits and costs (Boardman, et al., 2001; Hanley & Spash, 1993; Pearce, et al., 2006).

Hedonic Price Method. The Hedonic Price Method (HPM) estimates the value of
non-market goods by observing behavior in the market for a related good. Specifically,
the HPM uses a market good in which the non-market good is implicitly traded (ADB,
2001; Farber et al., 2002; OECD, 2006).

Contingent Valuation Method. The Contingent Valuation Method is survey-based
and estimates people’s intended future behavior in constructed markets. Through an
appropriately designed questionnaire, a hypothetical market is described where the
good(s) in question can be traded (F arber et al., 2002; OECD, 2006).

Travel Cost Method. Service demand may require travel, whose costs can reflect
the implied value of the service; recreation areas attract distant visitors whose value
placed on that area must be at least what they were willing to pay to travel to it (ADB,
2001; Farber et al., 2002; OECD, 2006).

Replacement Cost Method. Services could be replaced with man-made systems;
natural waste treatment can be replaced with costly treatment systems (ADB, 2001;
Farber et al., 2002; OECD, 2006).

9. Discount Future Events.

As mentioned, some impacts of dams on the environment and society are long-

15

term and not easily observed as to how to determine their present value in CBA. In fact,
the debate about the selection of discount rate has not ceased because philosophers,
economists, environmentalists, policy-makers and others view this question in different
ways. Therefore, this section reviews relevant studies in order to find a reasonable
discount factor and properly reflect the value of future events.

A dollar now is worth more than that same dollar several years from now and
consequently, people would rather to use their money now than save it unless certain
amount of compensation is granted (Aylward, et al. 2000; Belli, 2001; Hanley & Spash,
1993). Therefore, a discount factor is used to reduce the value of future benefits and costs
to their present values. In Gittinger’s (1982) opinion, there are two rates that are
commonly chosen as a discount rate: 1) the opportunity cost of capital, and 2) the interest
rate.

The opportunity cost of capital is the most ideal rate. Under the perfect market
without distortion, if the opportunity cost of capital can be determined and all possible
investments yield a reasonable amount of return, all of the capital in the economy can be
more efficiently utilized. However, this rate is sometimes hard to apply because no one
knows what the true opportunity cost of capital is (Gittinger, 1982).

The prevailing interest loan rate used in public projects is the most common
discount rate used in project analysis. It is the interest rate that closely reflects the
consumption rate of return. However, this rate can also be affected by the available
financial funds and other factors irrelevant to the project, and sometimes cannot truly

reflect the effect of time (Aylward, et al. 2000; Gittinger, 1982).

16

The discounts from 6% to 8% are commonly used in the public project in
developed countries and it is usually the interest rate. In most developing countries, 8% to
15% percent is applied in the project because the relative higher inflation rate and is
considered the appropriate discount rate in developing countries (Gittinger, 1982).

On the other hand, the issue of whether fiiture benefits and costs Should be
discounted in CBA is another important controversy in much need of review. In fact,
some scholars suggest that choosing a discount rate for future generations is unethical
and will damage the environmental sustainability in the future (Markandya & Pearce,
1988). For example, Cline (1999) and Weitzman (1998) suggest that the necessity of a
discount rate in the far future is uncertain. Therefore, future events need not to be
discounted and the discount rate in the future should be very low or zero (Weitzman,
1999). Hanley and Spash (1993) note that a zero discount rate means that future
generation is involved in the decision process, and can prevent the future damage to
environment.

I 0. Summary

Past studies suggest that the incorporation of the effects of environmental
degradation into public decision-making is not only an essential step towards achieving
more economically efficient management of natural resources, but it also encourages
practical strategies for sustainable development. As a result, an extended economic
analysis of projects and policies can help a country with scarce resources make the best
investments and contribute most to its overall public objectives.

In addition, evaluators also indicated that non-market goods and services which

should be internalized to the largest extent have been frequently neglected in the past. In

17

this regard, rough qualitative assessments early in the project cycle can generate valuable
returns by identifying environmentally unsound options and focusing on those that are

sounder overall.

18

CHAPTER III: CASE STUDY: MEI-NONG DAM (MND) PROJECT

In this section, more detailed information about the region affected by the MND
project is discussed. The history, characteristics, and the impacts of the project are
reviewed in turn.

1. Socio-Economic and Environmental Status

Kaohsiung City. Kaohsiung City harbor, once the second largest container
transport station in the world, is at the center of well-developed transportation networks
and prosperous industrial and commercial sectors in southern Taiwan.

According to the 2007 census, there were approximately 1.5 million people living
in Kaohsiung City and the population is expected to continue to grow. The current major
industries in Kaohsiung are steel, petrochemical, ship building, cement, and two export
industrial zones in Kaohsiung and Nan-Tse. These industries have made Kaohsiung the
most productive city in Taiwan for the past few decades (Kaohsiung City Government,
2009)

Currently, Kaohsiung City intends to develop the high value industry featuring
advanced technology, automation, high return and low pollution. Once the MND project
is completed, most of the water produced will be for the industrial and municipal uses in
Kaohsiung City (WRA, 1984).

Mei-Nong Township. Mei-Nong Township is located in the southern part of
Taiwan. It is 3 kilometers away from the large city, Kaohsiung City, where the economic,
political, and industrial center of southern Taiwan is located. The total area of Mei-Nong
County is 120.0316 km2 and the population of Mei-Nong, approximately 50,000 people,

has not changed much since 1990 (Mei-Nong Township Administration, 2004).

19

 

 

 

 

Taiwan

 

/
I
Mei-Nong Dam
’O I \n A
\N " "\~

// ’,-..-—
Kaohsiung City (S,

Figure 1 Map of Mei-Nong Darn Project

20

Since Japanese colonial rule, tobacco cultivation has dominated Mei-Nong’s
economy. This area is currently the most important tobacco plantation in Taiwan.
Although tobacco production has gradually decreased since 1987, when the Taiwan
government permitted the import of tobacco products, the small township continues to
grow tobacco and preserve it as one of its local traditions (WRA, 1984).

The selected dam site, right in the Yellow Butterfly Valley (YBV), lies in the
northeast comer of Mei-Nong Township and would be submerged under water once the
project begins. The YBV is the only completely intact, low—elevation forest and river
valley near the populated western part of Taiwan. It is home to many assorted wild flora
and fauna, such as the Maroon Oriole, Hodgson's hawk-eagle, and the Hundred-pace
snake, all categorized as the most endangered species and are protected by the Wildlife
Conservation Law in Taiwan (MPA, 1999; WRA, 1984). Other protected species in this
area include the precious and rare Crested Goshawk, Honey Buzzard, Serpent Eagle,
Emerald Dove, Black-napped oriole, Formosan blue magpie, Banded Krait, Turtle-
designed Snake, and the Brown tree frog (MPA, 1999). In addition, the valley floor
contains over 90 species of birds and 110 species of butterflies. Such a variety and
abundance of wildlife forms a precious and rare ecosystem.

Moreover, the Twin Creek Tropical Plant Nursery, next to Mei-Nong Township,
was built in 1935 by the Japanese Taiwan Forestry Administration for an experimental
species plantation. They imported 270 Species of plants from the world's tropical areas,
such as Southeast Asia, Australia, the Indian Subcontinent, South America, and Africa.
These plants were mainly sold to Japanese for horticultural uses (MPA, 1999). Today,

their collection includes 96 surviving species; 28 of which only exist in this nursery, and

21

some are the only plants of their species in Taiwan (MPA, 1999).

Geography of the Project Area. The climates of Kaohsiung city and Mei-Nong
Township are very similar and both are affected by monsoons, as well as their topography.
Kaohsiung is located south of the Tropic of Cancer. The climate is tropical with average
temperatures ranging from between 18.6 and 28.7 Celsius degrees, and average humidity
between 60 and 81%. Average annual rainfall is 1134 mm. The topographies in these two
areas are dominated by hills and mountains. The dry season typically lasts from October
to April. In general, this area has a wet tropical climate with high temperatures and a
relatively high humidity in the summer, followed by a dry climate in the winter
(Kaohsiung City Government, 2009).

2. Purpose of the MND project

Since the 1960’s, Taiwan has become an important processing and manufacturing
location for world products. More recently, the growing industries have gradually
expanded from northern Taiwan into the south. In order to make Kaohsiung become the
industrial center of Taiwan, several important infrastructures were proposed since the
1980’s (WRA, 1984). One of these projects was to build a large scale water storage dam
to satisfy the demand for water from industries and municipal uses. The dam project was
planned both to supply increasing water demands as well as to solve the water Shortage
problem in the southern region.

AS the second largest city in Taiwan, Kaohsiung is not only the center of the oil
refinery and shipbuilding industries, but it is also one of the busiest ports in Southeast
Asia. Since 1960, the expansion of these industries has led to a gradually increasing

population and a higher water demand. According to the water resource management

22

report of southern Taiwan by the Water Resource Agency in 1990, water demands will

increase from approximately 613.2 million m3 per year, in 2001 to 730 million m3, in

2021. Current water supply systems can only provide 1.66 million tons of water per day5
that is 605.9 m3 per year. If the goal has to be met in 2021, either the government has to

find a new water source or the rest of the demand will be met by transferring water from
agricultural use. However, if water is transferred from the agricultural sector, it will only
temporarily fill the gap. Satisfying the future water needs will rely on new water sources

and on more effective water conservation policies and regulations.

 

 

 

 

2.1 -
Zé 2 -
8 0 ., 2.0015
3% 1.9
Q: o 1.8 ~
t:
a 1.7 -
1.6 - 1.6841
1.5 T I I ‘l 1
2001 2006 2011 2016 2021
year

 

 

 

Figure 2 Estimated Increasing Demand in Kaohsiung City. (Source2WRA, 1990)

In response to the loss of water in the agricultural sector, as well as to meet the
projection for water demand in 2021, the MND project was proposed by the Taiwanese
government in 1984. The dam project was designed to hold 406 million cubic meters of
water at its full capacity. It is expected to supply 378 million m3 of water annually to

meet the expected water supply goal in 2021 and to satisfy the domestic and industrial

 

The estimate water increase is calculated by population increase times the daily water use per
person. According to the census of Kaohsiung City, the populations will slowly grow from 1.52
million people in 2001 to 1.76 million people in 2021. As for the industrial water increase, the
amount consumed by industries is projected by the increased percentage of industries in southern
Taiwan.

23

needs of Kaohsiung City, Tainan and Ping-Dong Counties in the next two decades. The
MND project will also be expected to provide power and higher quality water to people
and industries in Kaohsiung City (WRA, 1990).

The MND project was expected to begin in 1992 and start to supply water and
electricity in 1999 after seven years of construction. However, the project was suspended
in 1999, due to strong opposition from the people in Mei-Nong Township, environmental
organizations, and political parties. Since the project has been suspended, Taiwan
government decides to intake water from the Nan-Hua Dam in Tainan County to satisfy
the growth demand of water (WRA, 1984).

3. Potential Impacts of the MND Project

One of the positive impacts of MND project is to provide clean water and to
reduce the consumption of packaged water in Kaohsiung City. AS many heavy industries,
such as oil-refmeries and steel mills, are located in this area, the residents in Kaohsiung
have complained about the water quality for a long time (Tse, 2004). Almost all the major
water sources near Kaohsiung city have been polluted by the wastewater discharged by
these factories. After such long-term pollution, the water’s odor and color are abnormal
and still one of the concerns of the residents even after treatment. As a result, the majority
of their daily drinking water is from consumption of bottled water (Wu, 2007).

The MN D project is expected to solve this problem by using a water source in a
remote area where there is not much pollution. The goal is for people in Kaohsiung to
have clean tap water and save money from buying bottled water.

In addition to providing water for municipal use, the other important task of the

MND project is to maintain a consistent supply of water for the water consuming

24

industries during the dry season. The drought season adds further strain to the insufficient
water supply, and water consuming industries are often forced to shut down factories
temporarily. To protect these high technology industries, the govermnent asks some
farmers to stop irrigation in order to transfer water to the necessary sectors. In return,
these farmers receive compensation from the government. As the water consuming
industries continue to expand, more farmers are asked to stop irrigating for one or two
seasons a year. This difference in demand left by these farms can be temporarily replaced
by cheaper imports such as rice, sugar cane and fruits. However, this strategy can only
temporarily solve the problem, and will inevitably cause unforeseeable damage to local
agricultural productivity in the long run. If the MND was built, it could meet the
increasing demand without interrupting the agricultural sectors (Ke, 2005).

While the construction of MND project might contribute to the improvement of
water quality and the growth of industries in Kaohsiung City, there will also be important
social and environmental costs. First, if the MND were built, a minimum of five hundred
local people upstream will be displaced. Large portions of these people rely heavily on
natural resources. They earn their livings planting agricultural products in the proposed
flood zone, such as mangoes and papayas. The dam project will take away their source of
revenue and limit their rights to access natural resources such as fish or timber. Therefore,
in order to proceed with the MND, the project holders will have to compensate these
displaced individuals based on the law for the loss of their farms and help them to resettle.
This will inevitably increase the cost of the project as well as create unnecessary social
problems.

Second, there is fear that potential dam failure will cause huge casualties and

25

destroy the traditional Hakka culture; as a result, the local community has joined forces
the opposition party and several environmental groups to resist the execution of the MND
project. They believe the dam site is located in the cross area of several faults where
several large scale earthquakes have occurred. There are, on average, 214 earthquakes a

year in Taiwan (Central Weather Bureau, 2008). The most recent large scale earthquake

occurred in September 21“, 2000claiming more than 2,000 lives. The people of Mei-

Nong worry that the l47-meter tall dam, located just 1.5 km away, will bring devastating
consequences once it collapse due to earthquakes.

The local people are also worried that the dam will destroy the nearby landscape
where much of their traditional cultural customs take place. The balance between Mei-
Nong, a small village famous for making umbrellas and tobacco, and the harmony
between the people and the environment will be broken by the MND project because of
the large mechanical equipment entering, disrupting people’s daily lives. Moreover, the
dam damages the holy place of the local people. The YBV, known to the Mei-Nong
people as Twin Creeks, has strong cultural connections and connotations to Mei-Nong
society since its first settlement in 1763. The people of Mei-Nong view the Twin Creeks
and the YBV as the origin of their cultural and economic being. The construction of the
MND project will flood over the entire YBV, and permanently change the lives of Mei-
Nong’s people.

In addition to the social impacts, the MND project is expected to have serious
impacts on the environment 863 hectares of the land upstream from the dam will be
flooded; 725.72 hectare of this flood area is tropical forest, 100.92 hectare is rangeland,

35 hectare is a wild field or grassland, and 3 hectare is residential land. In other words,

26

the reservoir will lead to massive deforestation (WRA, 1984). The forest currently
provides food and shelter for a variety of flora and fauna, regulates climate, reduces soil
erosion, and provides recreational and aesthetic values.

Consequently, large dam construction projects have continuously led to public
controversy in Taiwan. Despite the Taiwanese government’s insistence of the projects’
economic benefits, more and more people have started to question the efficiency of large
dams and wonder if the economic benefits are enough to justify the environmental

damage.

27

CHAPTER IV: ANALYTICAL METHOD

The main goal of CBA is to estimate the net present value (NPV) of this project.
The previous chapters have discussed and identified the most Significant costs and
benefits involved in this study. Therefore, in this chapter, the focal point is how to
calculate and estimate the costs and benefits based on available references. As the
selection of a discount rate has direct influence on the NPV, an appropriate discount rate
for this study will be discussed referring to the common discount rate used in
international projects. Finally, this study will apply sensitivity analysis which give us a
big picture of the magnitude of the potential uncertainties and offer a reference for
decision makers.
1. Valuation of Dam project

In CBA, some effects can be valued through their market prices, such as
construction costs. However, the non-market costs such as the environmental impacts of
the dam and the tourism losses created by the reservoir cannot be determined simply
through a market valuation study; therefore, a non-market valuation study is required to
assess these values. While original data is best in a situation like this, when there are time
and budget constraints, environmental values may be estimated from existing studies or
secondary data (ADB, 2001). When using secondary data, information from relevant
studies is used to estimate the costs and benefits of similar projects in a specific area. The
transferred values must be used for the same kind of environmental conditions, and the

same terms of value must also be used.

28

2. Measure Benefits and Costs

This section will examine the economic valuations of each impact of the MN D
project and provide details for the appropriate valuation methods that are practical and
consistent with economic appraisal principles. The benefit and costs of MND and their
corresponding measurement approaches are shown in Table 2.

Income fiom Water Supply. The main task of MND is to offer a consistent supply
of water. Most of the water from MND will be sold for industrial and municipal uses in
Kaohsiung City, and the revenue will be used to cover the water production costs.

The benefit can be calculated by the water price times the quantity of water sold
to public and industries.

Income from Power Sale. In addition to supplying water, the MND can also
generate power by using the differenrce in height of upstream and downstream. This
benefit is estimated through the market price of power times the power amounts actually
provided to users.

Savings fiom Bottled Water. The construction of the MND can provide better-
quality water to people who live in the metropolitan area, and therefore save them from
purchasing bottled drinking water. According to Tse’s survey (2004) of 500 people living
in Kaohsiung, 68% of Kaohsiung residents use bottled water as their main source for
drinking and 30.2% of these respondents would like to stop buying drinking water as

long as they get improved quality of tap water.

29

Table 2 Appropriate Valuation Methods for the Impacts of Dam Construction.

 

 

Physical Measurement Valuation method
impacts
Benefits
Income for water sale Incremental water price >< quantity Market price
productivity sold
Income from power Electricity Power price x the Market price
sale generated quantity sold
Saving from reducing Saving on Drinking water price >< Market price,
use of packaged buying the quantity of municipal Shadow
water drinking water use >< percentage of Prices
water use in drinking
Tourism gain Gain of Reveal preference
upstream tourism (TCM)
Value
Costs
Construction cost Labor, Capital Market price
Operation and
Maintenance cost
Property loss Physical property Market price
Resettlement cost
Forest land, Product prices X quantity Market Price
Land Acquisition commercial
products
Tourism loss Loss of Reducing tourists number Reveal preference
downstream tourism x the average expenditure (TCM)
Value per person

 

Source: ADB, 2001

30

The total savings can be calculated through the following formula6:

Annual The amount The price of Number of
savings on of water each bottled water people stop 365
buying = person drinks x per million X using bottled days
bottled water daily tons water

Construction Cost. The MND project consists of the dam, the power system, and
the spillway. The total construction period is estimated to take seven years, and the year
before the project begins, year zero, is used to resettle the local residents and acquire land.
The construction cost is estimated based on the 1992 report of Sine-Tech Engineering
Consultants, Ltd.

Operation and Maintenance (0&M). O & M covers all services and materials
required in MND construction. The maintenance fee refers to the costs of maintaining
and replacing the engineering part of the facilities, and is estimated at 10% of the total
construction cost7. The operation costs are referring to the personnel expenditure and the
basic water treatment fee when the water is supplied. 0 & M costs will emerge in year
eight.

Replacement Costs. It is estimated that the MND project will continue to supply
water and power for 70 years. During the project analysis period, some parts of this
facility need to be replaced in order to keep both water and power system running well.
Two most important parts need to be replaced are the pipelines and the water gates. The

pipeline will need to be changed every twenty five years and the water gate has to be

 

According to the public construction regulation in Taiwan, the operation and maintenance costs
are estimated as 10% of total construction costs, total construction costs include the design,
investigation, and construction costs which are shown in Table 7 and Table 8.

31

changed every fifty years. The cost of replacing these two facilities is estimated based on
their constructing cost in 1992.

Resettlement Costs and Land Acquisition. Resettlement costs are composed of
two parts: compensation and assistance expenses. Compensation can be calculated
directly from physical property losses of the people located in the MND area. Analysts
may use the market price method to arrive at the value of property losses. The assistance
expenses are the costs of the government programs implemented to help the displaced
residents, and are determined accordingly. In the MND project, the estimated total cost of
resettlement, in 1992, is 1.388 billion NTD, and should be accounted for in year zero of
the project (WRA, 1992).

Opportunity Cost of Land. The opportunity cost of land will be estimated through
the value of ecosystem services per kilometer times the affected areas. The inundated
area includes forest, agricultural, and residential lands.

In fact, Pong (1992) uses CVM to estimate Mei-Nong people’s WTA for
constructing the MND and the results can be used in the analysis to represent the
opportunity cost of land. Consequently, Costanza (1997) use the social surplus to
calculate the values of ecosystem services in the world and the results are also used in the
calculation. This cost will be firrther addressed by using the data from Pong (1992) and
Costanza (1997) in the analysis section.

Tourism Gain and Loss. The Mei-Nong Township is famous for its good
preservation of Hakka culture and beautiful surrounding. Every year the Hakka Festival

attracts many tourists into the town for its exhibition of domestic culture and art. Most

32

tourists also come here to enjoy the fresh air and clean water and some parents or
teachers bring their children here to introduce them to the plentiful flora and fauna.

However, once the MND begins to provide water, the whole region will be
changed and replaced by different ecosystem and the expected reduction of tourists will
lead to obvious impacts on the local economy. Therefore, this study estimates the loss of
tourism through the reducing number of these tourists and their expenditure.

Although the landscape will be changed when the project starts, the new reservoir
also will provide a new feature to attract people. There are famous examples about dams
providing tourism value for people including the Bedok reservoir park in Singapore. The
new reservoir can provide people with a beating, camping jogging and hiking area. These
new benefits could be calculated through its average value per hector multiple the area of
reservoir.

Inflation Adjustment. Almost all the costs in MN D project are estimated based on
1992 consumer basis and the inflation factor should be taken into account in the analysis.
Table 3 shows the Consumer Price Index between 1991 and 2006.

3. Discount Factor

Two major discount rates are used in this study. First, Gittinger (1982) pointed
out that the common discount rate used in financial analysis is the rate at which the
enterprise is able to borrow money. A thematic review of WCD also suggests that a
discount rate of 6% is applied in a developed country, and consequently, a discount rate
in public projects ranged anywhere from eight to twelve percent is used in developing

countries considering the higher inflation rate (WCD, 2000).

33

Table 3 Consumer Price Index and Adjustment Factors

 

 

Year Consumer Price Index Adjustment Factor
1991 77.18 1.29
1992 80.63 1.24
1993 83.0 1.20
1994 86.41 1.15
1995 89.58 1.11
1996 92.33 1.08
1997 93.17 1.07
1998 94.73 1.05
1999 94.90 1.05
2000 96.09 1.04
2001 96.08 1.04
2002 95.89 1.04
2003 95.62 1.04
2004 97.17 1.02
2005 99.41 1.01
2006 100 1

 

Source: National Statistic, Taiwan, 1991-2006

Second, some scholars suggest future generations should have the same weight to
use the resource as current generation and a zero discount rate means that future
generations are involved in the decision process, and can prevent future environmental
damage. Therefore, this study also applies a zero discount factor as a reference and
intends to realize the profitability of MND project after considering the equity issue.

Lastly, in order to estimate the Internal Rate of Return (IRR) the discount rate of
3% is used. The IR is a rate of return used in capital budgeting to measure and compare
the profitability of investments. It is also called the discounted cash flow rate of return or
simply the rate of return (ROR).

4. Sensitivity Analysis
In order to better evaluate the potential impacts of uncertainty and risk. Sensitivity

analysis refers to an analytical technique used to test the potential earning capacity of a

34

project if actual events differ from the initial estimation made during the planning stage
(Gittinger, 1982). This type of analysis is useful as it provides flexibility in results. It can
be assumed that an actual event will not materialize exactly as planned because of
unexpected changes in factors over time or the use of faulty or limited data in the initial
projection. In forecasting any occurrence over time, an analyst may encounter two types
of situations: risk and uncertainty. Risk refers to a situation where the probability of an
outcome’s occurrence is available. In contrast, uncertainty refers to a situation where
such information is not available.

According to the cross check of WCD (2000), this study concerns following three
factors causing uncertainty: 1) the efficiency of dam, 2) overrun of construction costs,
and 3) schedule delays.

The Efficiency of MND. The dam site is located in a relative high area, and the
high slope will increase the chance of soil being brought into the reservoir and reducing
the capacity of the dam, as well as the amount of water and power available to the public
and industries. Therefore scenario one in Chapter V, accounts for the effect of reduced
water yield on the NPV due to more serious sedimentation problems.

The Overrun of the Construction Cost. Sedimentation isn’t the only factor capable
of affecting the NPV, the overrun of construction costs commonly leads to a different
result of the NPV. According to the crosscheck by Bacon and Besant-Jones in 1998, over
seventy dam projects financed by the World Bank between 1915 and 1986 show average
cost overruns of about 30%. Therefore scenario two will simulate the effects of

construction cost overruns on the NPV.

35

Delay of the Construction Period. Another potential source of uncertainty is a
delay in the project schedule. The WCD crosscheck shows 40% of projects with one year
delays, and 5% with five or more years. The impact of delays is discussed in the scenario
three.

5. Data Collection

The study area is located in the southern part of Taiwan. For full details of the
study area, please refer to Chapter III. The area of unit of analysis is the hectare. Data
related to the study area were aggregated from the environmental impact assessment
made by Sino-Tech Incorporated in 1992.

Data used in this study were obtained from both primary and secondary sources.
Secondary data reflecting prices were acquired from the Water Resource Agency
publication, the Taiwanese government, as well as other government studies on similar

topics.

36

CHAPTER V: RESULTS AND DISCUSSION

The net present value (N PV) of the project is discussed in this chapter. To
determine the NPV, the discounted values of benefits and costs are needed. The identified
benefits and costs, the NPVS, and the results of the sensitivity analysis are discussed in
unit. The analysis period in this study is designed as 70 years because the average life
span of dams in Taiwan is 70 years due to the soil deposition problem (Cheng, 2004).

1. Benefits of MND Project

The benefits of the MND project include income from the sale of water and power,
savings from reducing consumption of packaged water, and newly created recreation
value from the reservoir.

Benefits without WD Project. If this project were not to take place, the would-be
inundated area, consisting of tropical forest, cropland, and rangeland, could offer several
coo-services including providing food, raw materials, and cultural and recreational value.
In this study, two approaches are used to estimate these non-market services. First, CVM
is used to estimate the values for environmental goods and services in hypothetical
situations. Pong (1992) tried to use the CVM to estimate the opportunity cost of the MND
project’s selected Site. Based on her study, the WTA for constructing the dam project, or
opportunity cost, is 899.4 New Taiwan Dollars (N TD) per person every month. The
population of Mei-Nong Township is approximately 50,000, and therefore the
opportunity cost for the darn project will be 540 million NTD per year by multiplying the
WTA to the population of Mei-Nong town.

Second, the benefits created by the submerged land can be also estimated by

multiplying the area of flooded land to the averaged price of a serious of benefits. The

37

value of ecosystems services is estimated from the research of Costanza (1997) and the
benefits from ecosystem services are shown in Table 4.

Benefits with the MND Project. The MND is expected to satisfy the increasing
demand both from municipal and industrial sectors. The power and water supplied by the
MND will be the main benefits of the MND. Consequently, through improving the water
quality, the city’s residents could save money from buying bottled water.

Income from Sale of Water: The MND project was planned to satisfy the
increasing water demand in the Kaohsiung area. Once the new water source is established,
the annual income from selling water will become an important indicator of the project’s
benefit. In fact, municipal and industrial water uses in Kaohsiung City are two major
water consumers of the MN D. Therefore, the benefit of increasing water quantity can be

described in following:

Income Amount of
from water = Water price x water sold
sale every year

This study uses the market price of water in 2006 to estimate the benefits of the
project. The actual charge for municipal water use is 10.84 NTD per cubic meter and the
price for industrial water is 9.74 NTD per cubic meter (WRA, 2006) as the mission of the
project is to satisfy the increasing population and the growing industries. All the water
supplied by MND will go to these two sectors.

In addition, the MND is expected to generate 406 million cubic meters of water
annually, but part of the water will lose during the distribution and, therefore, 378.2

million cubic meters water is the actual amount sold every year.

38

Table 4 Benefit Provided by Ecosystem Services.

 

 

Service Name Area of Unit Benefit Total Benefit

land fU nit per per year
year (N TD) (million NTD)

1.Tropical Forest 726 ha

1.1 Climate Regulation 1 ha 6690 4.85

1.2 Erosion control 1 ha 7380 5.35

1.3 Nutrient cycle 1 ha 27660 20.08

1.4 Waste Treatment 1 ha 2610 1.89

1.5 Food production 1 ha 960 0.69

1.6 Raw material 1 ha 9450 6.86

1.7 Cultural 1 ha 60 0.04

2. Cropland 101 ha

2.1 Food production 1 ha 54 0.16

3. Grass/Rangeland 35 ha

3.1 Erosion control 1 ha 29 0.02

3.2 Waste treatment 1 ha 87 0.08

3.3 Food production 1 ha 67 0.07

3.4 Recreation 1 ha 2 0.01

Total Benefits provided by eco
services 44.11

 

Source: Costanza, 1997
Note: ha =Hectare; Exchange Rate: 1 USD for 30 NTD in 1997

Furthermore, the soil deposit rate 0.1% iS used in the analysis to simulate real yield
of water and power from the MND. The actual water of MND project sold to these two
sectors is listed in Table 5.

Income from Sale of Power: Similar to the income from selling water, the market
price of power, 2.3 NTD, per KW in 2006 is used to calculate the benefit of power sale.
According to WRA’S 1992 report, 146 million KW power is expected to be generated in
1999, and, the amount of power provided by the MND also gradually decreases due to

the soil deposition problem. Table 6 shows the expected benefits created by power sale.

39

Table 5 Income from Sold Water

 

 

Year Municipal Industrial Water Municipal Industrial Income
water water supplied by Water from Water from from sold
consumption consumption MND MND MND water
(Million m3) (Million m3) (Million (Million m3) (Million (Million
m3) m3) NTD)

1992 267.58 173.12

1993 0 279.72

1994 292.58 192.39

1995 302.09 197.70

1996 304.00 205.58

1997 324.48 189.32

1998 326.53 221.06

1999 341.90 225.93 24.75 14.90 9.85 161.56
2000 372.68 254.17 24.42 14.52 9.90 139.26
2001 369.45 244.46 24.09 14.50 9.59 139.07
2002 374.17 252.94 48.23 28.78 19.45 276.02
2003 367.40 238.22 71.80 43.56 28.24 417.72
2004 347.24 230.28 94.78 56.99 37.79 546.54
2005 353.60 240.61 117.21 69.75 47.46 668.92
2006 364.64 245.48 139.10 83.14 55.97 797.30
2007 361.77 255.23 160.48 94.09 66.39 902.37
2008 395.05 256.08 181.35 110.03 71.32 1055.19
2009 400.53 259.39 201.74 122.44 79.30 1 174.26
2010 406.00 262.71 221.66 134.58 87.08 1290.66
2011 411.48 266.03 241.13 146.45 94.68 1404.50
2012 416.95 269.34 260.18 158.07 102.11 1515.91
2013 422.43 272.66 278.80 169.44 109.36 1624.92
2014 427.90 275.97 297.02 180.56 116.46 1731.66
2015 433.38 279.29 314.86 191.47 123.39 1836.23
2016 438.86 282.61 332.35 202.16 130.19 1938.75
2017 444.33 285.92 349.48 212.64 136.84 2039.28
2018 449.81 289.24 366.29 222.93 143 .36 2137.98
2019 455.28 292.56 371.16 225.96 145.20 2169.63
2020 460.76 295.87 371.29 226.10 145.19 2168.30
2021 466.23 299.19 370.96 225.96 145.00 2166.95
2022 471.71 302.51 370.63 225.81 144.82 2165.59
2023 477.18 305.82 370.30 225.67 144.63 2164.21
2024 482.66 309.14 369.97 225.52 144.45 2162.82
2025 488.13 312.46 369.65 225.38 144.27 2161.42
2026 493.61 315.77 368.99 225.03 143.96 2160.00
2027 499.08 319.09 368.66 224.88 143.78 2158.58
2028 504.56 322.41 368.34 224.74 143.60 2157.14
2029 510.03 325.72 368.01 224.58 143.43 2155.69
2030 515.51 329.04 367.68 224.43 143.25 2154.24
2031 520.98 332.36 367.35 224.28 143.07 2152.77
2032 526.46 335.67 367.03 224.13 142.90 2151.29
2033 531.93 338.99 366.70 223.97 142.73 2149.80
2034 537.41 342.30 366.37 223.81 142.56 2148.30

 

40

Table 5 Continued

 

2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
2065
2066
2067
2068

Source: WRA annual report, 1992, to 2007

542.88
548.36
553.83
559.31
564.78
570.26
575.74
581.21
586.69
592.16
597.64
603.1 1
608.59
614.06
619.54
625.01
630.49
635.96
641.44
646.91
652.39
657.86
663.34
668.81
674.29
679.76
685.24
690.71
696.19
701.66
707.14
712.62
718.09
723.57

345.62
348.94
352.25
355.57
358.89
362.20
365.52
368.84
372.15
375.47
378.79
382.10
385.42
388.74
392.05
395.37
398.69
402.00
405.32
408.63
411.95
415.27
418.58
421.90
425.22
428.53
431.85
435.17
438.48
441.80
445.12
448.43
451.75
455.07

366.04
365.71
365.39
365.06
364.73
364.08
363.75
363.42
363.09
362.77
362.44
362.11
361.78
361.45
361.13
360.80
360.47
360.14
359.82
359.49

- 359.16

358.83
358.51
358.18
357.85
357.52
357.19
356.87
356.54
356.21
355.88
355.56
355.18
354.84

223.65
223.50
223.34
223.18
223.02
222.66
222.49
222.33
222.16
222.00
221.84
221.67
221.50
221.33
221.17
221.00
220.83
220.66
220.49
220.32
220.15
219.97
219.81
219.63
219.46
219.28
219.11
218.94
218.76
218.58
218.40
218.23
218.02
217.84

142.39
142.22
142.05
141.88
141.71
141.42
141.26
141.09
140.93
140.77
140.60
140.44
140.28
140.12
139.96
139.80
139.64
139.48
139.33
139.17
139.01
138.86
138.70
138.55
138.39
138.24
138.08
137.93
137.78
137.63
137.48
137.33
137.16
137.00

2146.80
2145.28
2143.76
2142.22
2140.68
2139.13
2137.58
2136.02
2134.44
2132.87
2131.28
2129.69
2128.09
2126.49
2124.88
2123.26
2121.64
2120.01
2118.38
2116.74
2115.10
2113.45
2111.79
2110.14
2108.47
2106.80
2105.13
2103.45
2101.77
2100.09
2098.40
2096.70
2095.00
2093.30

Note: The trend line for municipal water projection since 2008 is Y=5.4752X+301.98; The trend
line for industrial water projection since 2008 is Y=3.3 165X+199.7

Saving on Buying Packaged Water. As we mentioned in the previous chapter,

water quality is always an important factor affecting the consumers’ willingness of using

tap water. The bad water quality caused by pollution in the major water source in

Kaohsiung City forces almost every household in Kaohsiung to buy packaged water for

drinking.

41

Table 6 Income from Sold Power and Saving From Clean Water.

 

 

Year Power Income Municipal Drinking Annual Reduction Saving from
supplied from Water use Consumption of packaged reducing
by sold Use from (million of packaged water consumption
MND power MND m3)m3) water consumption of packaged

(million (million m3) (million m3) water (million
m3) NTD)

1999 1.44 3 .30 14.90 0.30 0.20 0.06 30.88

2000 1.43 3 .30 14.52 0.29 0.20 0.06 30.08

2001 1.43 3.30 14.50 0.29 0.20 0.06 30.04

2002 1.43 3.29 28.78 0.58 0.39 0.12 59.63

2003 1.43 3.29 43.56 0.87 0.60 0.18 90.24

2004 1.43 3 .29 56.99 1.14 0.78 0.24 118.07

2005 1.43 3 .28 69.75 1.40 0.96 0.29 144.51

2006 1.43 3 .28 83.14 1.66 1 . 14 0.34 172.24

2007 1.42 3.28 94.09 1.88 1.29 0.39 194.94

2008 1.42 3.27 1 10.03 2.20 1.51 0.46 227.95

2009 1.42 3.27 122.45 2.45 1.68 0.51 253.67

2010 1.42 3.27 134.58 2.69 1.85 0.56 278.82

2011 1.42 3.26 146.45 2.93 2.01 0.61 303.41

2012 1.42 3.26 158.07 3.16 2.17 0.65 327.48

2013 1.42 3.26 169.44 3.39 2.32 0.70 351.03

2014 1.41 3.25 180.57 3.61 2.48 0.75 374.09

2015 1.41 3.25 191.47 3.83 2.63 0.79 396.68

2016 1.41 3.25 202.16 4.04 2.77 0.84 418.83

2017 1.41 3.24 212.65 4.25 2.92 0.88 440.54

2018 1.41 3.24 222.94 4.46 3 .06 0.92 461.87

2019 1.41 3.24 226.24 4.52 3.10 0.94 468.70

2020 1.41 3 .23 226.10 4.52 3.10 0.94 468.42

2021 1.40 3.23 225.96 4.52 3.10 0.94 468.12

2022 1.40 3.23 225.82 4.52 3.10 0.94 467.83

2023 1.40 3.22 225.67 4.51 3.10 0.94 467.53

2024 1.40 3.22 225.53 4.51 3.09 0.93 467.23

2025 1.40 3 .22 225.38 4.51 3.09 0.93 466.93

2026 1.40 3 .21 225.24 4.50 3 .09 0.93 466.62

2027 1.40 3.21 225.09 4.50 3.09 0.93 466.32

2028 1.39 3 .21 224.94 4.50 3 .09 0.93 466.01

2029 1.39 3 .20 224.79 4.50 3 .08 0.93 465.69

2030 1.39 3.20 224.63 4.49 3.08 0.93 465.38

2031 1.39 3.19 224.48 4.49 3 .08 0.93 465.06

2032 1.39 3.19 224.33 4.49 3.08 0.93 464.74

2033 1.39 3.19 224.17 4.48 3.08 0.93 464.42

2034 1.39 3.19 224.01 4.48 3 .07 0.93 464.10

2035 1.38 3.18 223.86 4.48 3.07 0.93 463.77

2036 1.38 3.18 223.70 4.47 3 .07 0.93 463.44

2037 1.38 3.18 223.54 4.47 3.07 0.93 463.11

2038 1.38 3.17 223.38 4.47 3.06 0.93 462.78

2039 1.38 3.17 223.22 4.46 3 .06 0.92 462.45

2040 1.38 3.17 223.06 4.46 3 .06 0.92 462.12

 

42

Table 6 Continued

 

2041 1.38 3.16 222.90 4.46 3.06 0.92 461.78
2042 1.37 3.16 222.73 4.45 3.06 0.92 461.44
2043 1.37 3.16 222.57 4.45 3.05 0.92 461.10
2044 1.37 3.15 222.41 4.45 3.05 0.92 460.76
2045 1.37 3.15 222.24 4.44 3.05 0.92 460.42
2046 1.37 3.15 222.07 4.44 3.05 0.92 460.08
2047 1.37 3.14 221.91 4.44 3.04 0.92 459.73
2048 1.37 3.14 221.74 4.43 3.04 0.92 459.38
2049 1.36 3.14 221.57 4.43 3.04 0.92 459.04
2050 1.36 3.13 221.40 4.43 3.04 0.92 458.69
2051 1.36 3.13 221.23 4.42 3.04 0.92 458.34
2052 1.36 3.13 221.06 4.42 3.03 0.92 457.98
2053 1.36 3.12 220.89 4.42 3.03 0.92 457.63
2054 1.36 3.12 220.72 4.41 3.03 0.91 457.28
2055 1.36 3.12 220.55 4.41 3.03 0.91 456.92
2056 1.35 3.11 220.38 4.41 3.02 0.91 456.57
2057 1.35 3.11 220.21 4.40 3.02 0.91 456.21
2058 1.35 3.11 220.04 4.40 3.02 0.91 455.85
2059 1.35 3.10 219.86 4.40 3.02 0.91 455.49
2060 1.35 3.10 219.69 4.39 3.01 0.91 455.13
2061 1.35 3.10 219.51 4.39 3.01 0.91 454.77
2062 1.35 3.09 219.34 4.39 3.01 0.91 454.41
2063 1.34 3.09 219.16 4.38 3.01 0.91 454.04
2064 1.34 3.09 218.99 4.38 3.00 0.91 453.68
2065 1.34 3.08 218.81 4.38 3.00 0.91 453.31
2066 1.34 3.08 218.63 4.37 3.00 0.91 452.95
2067 1.34 3.08 218.46 4.37 3.00 0.91 452.58
2068 1.34 3.07 218.28 4.37 2.99 0.90 452.21

 

Note: About 2% of municipal water use is drinking water; 68.6% inhabitant of Kaohsiung use the
packaged water as the source of drinking water; 30.2% of the inhabitant would use tap water and
stop buying packaged water if a new water source is available.

Although the government of Kaohsiung has worked hard to improve water quality
in the last decade, some problems such as odor and color of the water still exist. The rate
of buying among the residents in Kaohsiung remains high.

According to a survey of 500 households in Kaohsiung (Tse, 2004), 68.6 % of
people in Kaohsiung city use packaged water as their major source of drinking water. The
same survey also'indicates that 30.2% of respondents would be likely to reduce packaged
water consumption if a new water source were established. The price of packaged water

is much higher than tap water, and the cheapest bottled water is around 500 NTD per ton

43

(Tse, 2004). Therefore, the reduced amount of money spent on buying water due to
improved municipal water quality can be seen as one benefit brought by the MND project.
The benefit of saving for buy water is shown in Table 6.

New Recreational Value. The newly formed reservoir could create new
recreational value. According to Costonza’s study (1997), the lake can provide at least
230 USD recreational value per hectare per year. The new reservoir covers 863 hectares
and will create 5.9478 million recreational values each year for both local residents and
tourist. This benefit is calculated by multiplying the area of reservoir to the recreational
value per unit area.

2. C 0sts of MND Project

The major costs of the MN D project are divided into three categories: 1)
acquisition of land, 2) construction costs, and 3) replacement, maintenance and operation
costs.

Land Right Acquisition and Resettlement C osts. This cost will happen in year zero,
which means that the cost happens before the project has begun. According to the WRA’s
plan, 1.3884 billion NTD will be used to acquire the rights to use the land and resettle the
affected people (WRA, 1992).

Construction Costs. The MND project consists of a water supply system and the
power system construction. The total construction period for the water supply system is
seven years; the construction of generation system begins in year four. The complete list
of construction items and the expenditures for these two systems are shown in Table 7

and Table 8.

44

N02 Jam? H00.5om

 

mSNnN

45

 

w. 5% m. _ Km «.33 Némom 03.2 0.32 5.08— 38,—.
3di v0.30 no. _ 3 Exam» gnaw 3.02 v05: wufinm 00; 833005 .v
3.00m 3.2% $.80 $.03 mmgmm and: we. _ 2 o 00.0 833302: E3 @700 .m
@052 >0an mam—v maven NNEN 0.”: ~63. o .8055
mm mm on em mm 2: m2 E050 ~_.N
mu so we we we 830085 532m =cm 2N
msm msm mdm mNN m _ 2. ms 53008.:— _S:0E=o.__>:m ofim
2H3 fit me 308035 0235002 ad
fimnfi flaw—m mam—m mdw—m 0.22 :39 ad
5.2 m.” mm 0.00 E0003 03580 EN
#062 Wmmm Known ~60. >03 Sam 0N
v.3 Wm «Son .62 353:0 Eam 33>? Wm
c. I; mdov mdov o. _2 053.5 33>» ed
v.3 0.3 N: .com acwficoemvom md
Nam #03 0.0: :03 00—85 33>» N.~
E mam mom o 830.5300 .33. _.~
:30
o mo #60 cote—50:00 000.__Q.N
Aoez
00:55 380 3080—3000M
032 as 8:03.03. .05.:

h 30> w 30> m 30> v 30> m 30> N 30> _ 30> o 30>

 

803mm 339m 333 23 809 me 300 53:03:00 A. 033,—.

N03 .5 H00.50m

 

”.9: 0.02: 3.08 New o 33

3+: 8.8m 3: ~33. me o 8.3 Suwanee .4
co :8

_ 8.3 038 00200 038 .m
.8 as:

as: as: 8.3 o sou aomsofimaoo sees .N

9.2 ”has 208 8 o seesaw

0.3. gm 053300 050 a:

at 3 See 003 m2

at n: 8:285 N:

Ga :0 86282 :0

3% v.08 03. 83.800 S ._

S S eouofimaoo 080 a.

2 200 8330 a:

Sam ”was :03 S

m 803% 0mg 0;

we 34 cases 038 E

4.5. a. : 0% can I

vdm m.vm €033 Momma—db 530% MA

0.2: 4.3 we; use? 2

a. 03. gm cam 035 2

Sou—9mm 330% no «moo somwosbmaooé

082 A. 30> c 30> m 30> v 30> m 30> N 30> _ 30> o 30>

 

803% 330A me 300 83:03:00 w 030,—.

46

Replacement, Operation and Maintenance Fee. According to the design report of
Sino-tech Ltd., two important units of the dam, the water gate and the pipelines, will
require replacement at certain intervals in the project analysis period. The pipeline needs
to be replaced every twenty five years (i.e., the years of 2023 and 2048). The cost for
each pipeline replacement will be 128.70 million NTD. As for the water gate, it only
needs to be replaced every 50 years, and it costs 80.50 million NTD and will incur in
2049.

Operation costs include personnel and basic water treatment fees. A total of 60
crew members are needed to operate the water supply and power systems: 45 for the
water supply system, and 15 for the power system. The average salary for each crew
member is 350,000 NTD each year, and 21 million NTD of personnel costs will be
incurred afier the project begins running in year eight.

The basic water treatment fee depends on the actual amount of water supplied by the dam.
The cost for basic water processing is 0.121 NTD per cubic meter of water. Most of the
amount is for purchasing the disinfection dose to treat the water. Once the basic water
treatment is done, the water can be sold for industrial use or sent for further treatment
before supplying to municipal sectors. The complete costs are shown in Table 9.

3. Discussion of Results

After the benefits and costs of the MND project are determined, the next process
is to examine if the project is economically efficient by calculating the NPV of MN D
project. The discount rate used in this analysis is 6%, which is also the interest rate of the
Central Bank in Taiwan in 1992. The NPV is a negative 5.024 billion NTD without

considering the loss of ecosystem services.

47

Table 9 Maintenance, Replacement and Operation Costs

 

 

Year Maintenance Personnel Personnel Basic Replacement
. Fee for Power Expenditure Fee for Treatment Costs
Maintenance Generation for Water Power Cost of
Fee for Water System Supply Generation Water
SUPP.” System (million NTD ) System System (million
(million NTD) (million NTD)
NTD)
1999 260.94 31.72 157.5 52.5 2.298
2000 260.94 31.72 157.5 52.5 3.035
2001 260.94 31.72 157.5 52.5 5.996
2002 260.94 31.72 157.5 52.5 8.886
2003 260.94 31.72 157.5 52.5 11.707
2004 260.94 31.72 157.5 52.5 14.461
2005 260.94 31.72 157.5 52.5 17.149
2006 260.94 31.72 157.5 52.5 19.775
2007 260.94 31.72 157.5 52.5 22.34
2008 260.94 31.72 157.5 52.5 24.847
2009 260.94 31.72 157.5 52.5 27.298
2010 260.94 31.72 157.5 52.5 29.693
2011 260.94 31.72 157.5 52.5 32.037
2012 260.94 31.72 157.5 52.5 34.33
2013 260.94 31.72 157.5 52.5 38.575
2014 260.94 31.72 157.5 52.5 38.773
2015 260.94 31.72 157.5 52.5 40.928
2016 260.94 31.72 157.5 52.5 43.041
2017 260.94 31.72 157.5 52.5 45.115
2018 260.94 31.72 157.5 52.5 45.799
2019 260.94 31.72 157.5 52.5 45.799
2020 260.94 31.72 157.5 52.5 45.799
2021 260.94 31.72 157.5 52.5 45.799
2022 260.94 31.72 157.5 52.5 40.928
2023 260.94 31.72 157.5 52.5 43.041 128.7
2024 260.94 31.72 157.5 52.5 45.115
2025 ' 260.94 31.72 157.5 52.5 45.799
2026 260.94 31.72 157.5 52.5 45.799
2027 260.94 31.72 157.5 52.5 40.928
2028 260.94 31.72 157.5 52.5 43.041
2029 260.94 31.72 157.5 52.5 45.115
2030 260.94 31.72 157.5 52.5 45.799
2031 260.94 31.72 157.5 52.5 45.799
2032 260.94 31.72 157.5 52.5 40.928
2033 260.94 31.72 157.5 52.5 43.041
2034 260.94 31.72 157.5 52.5 45.115
2035 260.94 31.72 157.5 52.5 45.799
2036 260.94 31.72 157.5 52.5 45.799
2037 260.94 31.72 157.5 52.5 40.928
2038 260.94 31.72 157.5 52.5 43.041
2039 260.94 31 .72 157.5 52.5 45.115
2040 260.94 31.72 157.5 52.5 45.799
2041 260.94 31.72 157.5 52.5 45.799

 

 

Maintenance fee is 10% of total construction cost.

48

Table 9 Continued

 

2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056-
2068

260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94
260.94

31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72
31.72

Source: WRA, 1992

157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5
157.5

52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5
52.5

40.928
43.041
45.115
45.799
45.799
40.928
43.041
45.115
45.799
45.799
40.928
43.041
45.115
45.799
45.799

128.7
80.5

If the loss of ecosystem services is calculated by using Mei-Nong people’s WTA

to accept the MND, the NPV comes to negative 15.773 billion NTD. Even using more

conservative estimate of ecosystem loss (Costanza, 1997), the NPV is still negative 8.026

billion NTD. These NPVs show the projectis not economically feasible at 6% discount

rate and other potential alternatives should be considered since the MND is not the best

way to contribute to economic efficiency.

Based on the interpolation of discount rate as identified in Table 10, the IRR of

the MND project is around 3.49% and it is lower than the prevailing interest rate 6%. The

low IRR of the MND suggests the anticipated return is lower than the return of

investment on a similar project. Therefore, the MND project is considered infeasible and,

should not be accepted.

However, when 0% discount rate is applied in the analysis, the NPV of the MND

project turns out to be positive (11.584 NTD). The results suggest the execution of the

project is feasible and will increase the efficiency of resource distribution when

considering the future generation has the same right as current one to decide how to

manage environmental resources. The present values of benefits and costs at a zero

discount rate are shown in the second column in Table 10.

Table 10 NPV of the MND Project.

 

 

ltems PV at 6% Discount PV at 0 %Discount PV at 3 %Discount
Rate Rate Rate
(Million NTD) (Million NTD) (Million

NTD)Note

Benefits

1. Sale of Water $12919.6 $128443.7 $355838

2. Sale of Power $84786 $832943 $232169

3. Saving from Buying $ 33.4 $223.1 $74.1

Drinking Water

4. Benefits forgone for $ 509.4 $ 540.0 $524.3

constructing the new dam

5. New tourism value created by $ 142.8 $ 151.4 $147.0

the reservoir

Costs

1. Land acquired and ($13103) ($13889) ($13484)

Resettlement costs

2. Direct Construction Cost for ($135023) ($ 17701.3) ($154136)

Dam

3. Indirect Construction Cost ($20253) ($26552) ($23120)

4. Direct Construction Cost for ($18577) ($22652) ($20479)

Generation System

5. Indirect Construction Cost ($278.7) ($339.8) ($307.2)

6. Power Delivery Cables ($30.6 ) ($38.7) ($34.3)

7. Preparation Fee for Dam ($31918) ($43491) ($37116)

Construction

8. Preparation Fee for ($343.3) ($528.7) ($424.6)

Generation System

9. Maintenance Costs ($47951) ($204862) ($85233)

10. Annual Personnel ($34408) ($147000) ($61159)

Expenditure

1 I. Basic water treatment cost ($4882) ($28395) ($10267)

12. Replacement Costs ($303.5) ($337.9) ($319.9)

13. NPV (W/O considering the ($5024.40) $169082.8 $26465

ecosystem, cultural and tourism

loss)

14. NPV ($15,773.12) $115845 $63880

 

50

4. Sensitivity Analysis

This study applies sensitivity analysis to assess the effects of following uncertain
parameter: 1) the efficiency of dam 2) overruns of construction costs and 3) delays of
schedule.

Scenario One: Efliciency of the MND. Sedimentation problems exist in almost
every dam in Taiwan, and therefore, the first scenario wants to examine the impact of
higher sedimentation on the NPV of the MND project. 1% soil deposit rate is used in this
scenario.

The higher soil deposited rate directly leads to the reducing yield of water and
power and lowers the NPV from - 15.778 billion NTD to -19.307 billion NTD. The
decrease rate is about 22% under the 6% discount rate. The effects of sedimentation are
shown in Appendix 2.

Scenario Two: Overrun of the Construction Costs. The impact of overruns of
construction costs is examined in this scenario using 30% overruns during the
construction period. This scenario confirms that overruns do have an obvious effect on
the NPV. The NPV decreases about 45%, from -15.778 billion NTD to -22.894 billion
NTD. The effect of overruns of construction costs on NPV is presented in Appendix 3.

Scenario Three: Delay of the MND Project. In addition to sedimentation and the
overrun of the construction costs, delay of the project schedule is another common
problem. In this scenario, a one year delay of the project finish was applied in the
calculation and the benefits of water and power sales as well as savings from packaged
water consumption begin to happen in the year nine. The results show that the delay also

lowers the NPV. The NPV of the project after incorporating the delay factor decreased

51

6.8%, from -15.778 billion NTD to -16.845 billion NTD. The calculation is presented in

Appendix 4.

The results of the Net Present Value of the MN D project incorporate all of the

above factors and the summary of the simulation analysis based on the above scenarios

are presented in Table 11.

Table 11 Sensitivity Analysis of the MND Project.

 

 

Types of uncertainties NPV Economic Change % of Data shown in
(Billion Feasibility NPV appendix
NTD)

The annual soil deposited ($19307) Not beneficial 22% decrease A2

rate increase from 0.1% to of NPV

1%

The construction costs ($22.894) Not beneficial 45% decrease A3

overrun 30% of NPV

The project schedule delay ($16.845) Not beneficial 6.8% decrease A.4

for one year

52

of NPV

CHAPTER VI: CONCULSIONS AND RECOMMONDATIONS
1. Conclusion

The goal of this study is to use an objective approach to determine if a policy can
contribute to the economic efficiency of creating social welfare. To answer these
questions, the following analysis has been conducted in this study: 1) identify the benefits
and costs incurred in the project and define their values, 2) choose a proper discount rate
so that the benefits and costs in the future can be used in comparisons in present value,
and 3) conduct sensitivity analysis of commonly occurring problems in dam projects and
identify their effects on the dam project.

First, the previous study on the MND project (WRA, 1984) did not consider the
opportunity cost of submerged land and making the MND appear overly optimistic. After
considering the value of the flooded area, the NPV will lower fiom -5.024 billion NTD to
-15.778 billion NTD. Using a more conservative estimate of the value of ecosystem loss
(Costanza, 1997), the NPV is -8.026 billion NTD. Moreover, considering the IRR 3.49%
is lower than the interest rate in 1992, the project cannot bring more benefits than interest.
These results indicate that the MND, as an approach to providing water to Kaohsiung city,
is not feasible.

Second, considering the equity issue of future generations, some scholars suggest
that very low or zero discount rate should be applied in economic analysis (Cline, 1999;
Weitzeman, 1998). Two discount rates, 6% and 0 %, are used in this study. The MND
project is considered unfeasible at 6% rates as the NPV is, -15.778 billion NTD. As for
the NPV at 0% discount rate, the NPV become 115.845 billion NTD. While considering

the 0% discount rate can make each project more attractive, it also causes the problem of

53

selecting the most appropriate project. Most of the projects will become positive and let
the decision makers hard to select the best project. Therefore, the NPV at 6% discount
rate is more appropriate in this analysis.

Referring to the WCD’s thematic review (WCD, 2000), this study examines
scenarios involving three types of common uncertainty for dam projects through
sensitivity analysis: unexpected performance, overrun of the construction cost and delay
of the project. Of the three scenarios, the overrun of construction costs has the most
obvious impact; a 45 % decrease of the NPV. The effects of water yield reduction and
delays decreased 22% and 6.8% of the MND project’s NPV respectively. Once these
factors are taken into account, the MND becomes more and more unfavorable.

2. Restriction, Limitation of the Study

While the goal of this study is to re-examine the MND project’s profitability by
incorporating several ignored factors, some limitations are still remaining.

First, this study left out some benefits and costs which have not been extensively
studied. For example, whether the dam can reduce the emission of greenhouse gas is not
clear yet, and further studies are needed to help determine this effect. In addition, this
study did not take into account the cost of decommissioning the dam. In Taiwan, no large
scale dam is decommissioned due to the lack of law and policy. The lack of this cost in
the CBA may cause an overestimate of the NPV.

Second, using the WTA is a possible way to reflect non-market goods and
services, but the problem with protesting, strategic over-bidding on WTA may lead the
result of CBA to a problematic direction. Most respondents in Mei-Nong strongly oppose

the MND project, and they may have higher WTAs in order to boycott the project. In the

54

case, the protesting WTA may lead to overestimate the value of non-market goods.

Third, distortions of market are not taken into account. Due to the limited amount
of information and time, the estimates of benefits and costs are directly from their market
price instead of the real price which would include taxes as well as subsides on the
imported goods.

3. Recommendations

Originally, the purpose of the MND project is to supply the water needed for
municipal and industrial use. From the results of CBA, this study suggests that the MND
project will result in overall negative impacts on society. Indeed, the MND may be
beneficial to most residents and industries in Kaohsiung City, but the people in the
watershed may suffer from the project. For the benefit of the entire society, it is necessary
for the government to pursue better solutions to create the water resource.

In order to effectively supply and manage water resources, several
recommendations could be considered.

Create a Relatively Small Scale or Decentralized Water Storage System. The
MND is expected to meet the increasing water use within 20 years; however, considering
a large scale project usually take a lot of time and money, and often with delays, 3 small
scale projects might be a better option since it is easier to carry out, causes fewer
undesirable impacts to the neighboring area, and is easier to maintain.

Use Alternatives to Supply Water. It is becoming more difficult to build new dams
in Taiwan as desirable darn sites are hard to find. Additionally, opposition from the locals
leads to more difficulties. Instead of constructing the new dams, the government should

seek other potential solutions. Surrounded by ocean, Taiwan has the potential to use

55

desalination to acquire more water. Other alternatives could be taken into account, such
as decentralized underground reservoirs, which have a less impact on surface activity, and
the installation of advanced water treatment equipment to reuse water.

Set up a Water Market. Unlike many developed countries, water in Taiwan is
provided directly by the government. In order to maintain a basic standard of living and
competition in industry and agriculture, water is provided to these sectors consistently at
a consistently (subsidized) low price. This low water price often leads to waste or overuse.

When comparing the actual water price (10.84 NTD/ ton), paid by consumer in
2005 in this study to the water price (22.54 NTD/ ton) which would make the project
economically feasible, it is apparent that the curent income from water sales cannot cover
the cost of production. Consequently, with insufficient funds to help maintain the
equipment and pipelines, even more water may be wasted during transmission.

Taiwan’s rapid economic expansion and climate restrictions have provided a
strong incentive to the proponents of the dam project. The MN D project is seen as a
positive step toward the social growth. Yet, the impacts of MND make opponents
question the true costs. The debate has lasted for almost two decades and still no
compromise has been reached. The dam is still seen as the only way to solve the water
scarcity problem for government even though other alternatives are available such as
desalination, water reuse, improved storage and recharge of ground water aquifers.

The application of CBA is a very useful tool to evaluate the project efficiency
from an economic perspective. By incorporating the loss of the ecosystems, the effect of
different discount rates and the potential impacts of uncertainty in the CBA, this study

tries to provide a relatively objective reference for both proponents and opponents.

56

However, in order to provide a more comprehensive view for the decision makers,
social, cultural and political factors should be included in the future. A more restricted
interdisciplinary perspective will be needed to further illuminate all possible impacts of

the dam on society and the environment.

57

APPENDICES

58

wvwm: £5 3 >mZ

 

 

 

$.52- fee 8 >n—Z

 

88- Ra- :% 8% R: %8 2 :. 82 m8. % _ m a 388m 82 88885
%N. 8m. :3. 8%. 8% 3% 8% E: 82 n8- :8 808m 82
8% 9% 8:. N. 2. £8 8% 5.... 82 82 %_~ 8223. 83888 88885
8% 2% 8:. 2 2. £8 8% 5.... 82 NE % R 888.83. 88:5 85..
_ 2 _ _ _ _ _ _ _ _ 888 8888.8... 8:85
8% 8% E... 8% 8% 3% 8% E: 8.2 $2 8 88 .88
380 “588533—
c m 88 25833 .533 2QO
SN 2 N 28888 8:888 88¢.
8m 8m 88 88:38:
an n: 2. a o o o o 53% 8:888 .e 8n. 8:885
%v :3 %a ”a 8.. a: E ”R 88.580 8a 88 8.2 8888...
% o o o 8.80 8:3 838
a: 2. on o 80 882880 8885
one 9% 8m a. seam 888w 8.. .80 88.5.80 825
8% N8 .8 Sn 5. t _ _ _ _ 80 88.588 8085
88. Ru. %:. 3.8 SE a: 3 8o 8.2 86 88880 88a
23 _ 88° EoEoEomom Ea :oEBEcou 28..—
892 8::5 380
8:1 4%- :8. :8. .8. .8- so. .8. 38. 8 28:3 88885
“R 8.8. a c o c o c o 38 _% 388m 83
E .2 28> 885
2% 2% 88. 8.885 as .3 888 388m
0 c o o o o o c o o 033/ setup—00.. wfimmohoc—
cm 2 o o o o o o c o 883 8255 8:8 58.. 8:8
m m c o o o o c o o 88.2 28
3 8 o o o o o o o o a: .83 38885
82 m: c c c o c c c c a: 883 .8882
882 8==§ 588m
88 82 82 82 82 m8. 8% 8% 82 82 85$ 8.2.2:. 388%

£335.. omEonoom _ 5389..

59

 

 

 

 

a_mm MNMN onN ”chm vwmm waMN momm o-om o_w_ c_c_ N_v_ Nom_ nwo new MMM MOM ac vw_-. an. Moo. Nwa-

o_MM v_MM h_MM ava oan owa ocam ”chm __mm McMN vc_m vow_ whe_ ww¢~ 5NN_ coo_ Mon MNM cum on cvm-

awn wen wvm new wvm new wen vwm —vm _VM hMm MMM NMn omm «NM MNM can MMn _vm oMm NMM

wen awn wvm wvw awn new own va _vw _vw bMM nmn «Mm OMM mmm mmm can MMM ~vw an NMM

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ — _ _ _ _

va new awn awn awn wvm wen va .vm _vM hMm MMM NMM oMM MNM nNm NNM cum b_m v_w N_m

wv 0v wv ow ow nv Mv .v aM oM vM NM cM 5N MN mm cm 5. v_ N- a

o_N ogm o_N o_m c~m o_N ofim o_m c—u c_N o_N c_N o_m o_N o_N o—m c_N c_N o_N o_N o_N

Mam Mom Mam Mam Mam Man Man Mam Mom Man Man Mam Mam Mam Mom Mom MMN Mom Mam Mam Mom

nv
6

waM ~hMM VhMM ©_MM MM_M mean MMBN comm _cMN hm_N ava. th_ a_m_ h¢- Moe. MMM van _MM _o_ hm_- o_v.

amov Nwov owov meow vmwM nMoM cva .mmM NnoM avwm _vom wmvm __~N waa— emu. mmm_ cwm- Mvc_ Man MMM mum

o o c c o o c w o o c c o o o o c c o w w

wow wow awv Nov _vv ¢_v boM VbM _MM hNM MOM aha vMN MNN mM— Nb— mv_ w__ ca 00 oM

M M M M M M M M M M M M M M M M M M M M M

m_v_ c_v_ M_v_ ooM_ MMM_ chm_ wo- cM__ sco_ coo vmo oww chm nae wvo own Mow 00M chm co. #0

no_m wo_N oh_m MM_N oMom oM¢_ on_ Nmn_ Mme. w_m_ Mov_ _om_ Vh__ mmo_ moo has 000 me w_v ohm am—

cM am MN hm 0N mm vm MN mm .N on a. w. h- o_ m- v. M. N_ __ @—

_Ncm cNoN o_cN w—om b_cN c-om m_cm v-cm M—ON N_¢N __oN c—cm aocm «cam hcom ecON Meow ecom MOON Noam .ccm

€258 mmmbmad. omfioaoom _ 595%?

 

 

 

 

evhN ovbN Mth emnN oehN MebN heuN obbN vbbN bth ~wa thN MwhN _ohN MahN MohN NowN mowN @OMN MmeN e_MN
bMvM _va vva wva _nvM mva wva NevM mevM oevM Nva envM auvM vaM eMvM cavM MavM hovM ocMM nbMM NCMM
Mvm wvn ave Mvm Mvn Mvn Mvm Mvm wvm wvm ave wvm wvm wvn wvm wvn Mvm Mvm wvm hue wvm
Mvn wvm Mvm wvn wvn wvm wvn wvm wvm Mvn wvn wvm wvn wvm ave wvn wvn wvn Mvn she wvm
_ _ _ _ _ _ _ _ _ ~ _ _ ~ _ _ _ _ _ _ _ _
Mvn wvm wvm wvm wvm ave wvn wvm wvm Mvm wvn wvn wve wvm wvm Mvm wvm wvm Mvm hue Mvn
oN_
ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev
¢_N o_N o_N c_N c_N o_N c_N o~N c_N o_N ¢_N o_N o_N o_N o_N o_N o_N o_N ¢_N o_N o_N
MMN MMN MaN MaN MMN MaN MaN MaN MoN MoN MaN MaN MMN MMN MaN MoN MaN MaN MaN MaN MaN
m
vaNM woNM _cMM MOMM MOMM N~MM M_MM a_MM NNMM eNMM aNMM MMMM eMMM cvMM MvMM thM cwMM vMMM hMMM ~eMM veMM
ewoM owoM MaaM eaaM ooov Moov hoov o_ov v_ov h_ov .ch vNov wNov _Mcv nMov wMov Nvov mvov Mvov Nmov mmov
e e e e e e e e e e e e e e e e e e e e e
_ev Nev Nev Nev Mev Mev Mev vev vev vev mev mev mev eev eev eev rev bev bev wev wev
M M M M M M M M M M M M M M M M M M M M M
onM_ _wM_ NMM. va_ MMM_ NMM_ owM_ oom_ NoM_ voM_ MOM. haM_ ooM_ _ov_ Nov. vov. eov_ hov_ oov. __v_ M_v_
eM_N MM_N oM_N _v_N Nv_N vv_N Mv_N hv_N Mv_N om_N _M_N MM_N vm_N em_N hw_N ow_N oe_N _e_N Me_N ve_N ee_N
_m on av wv 5v ev Mv vv Mv Nv _v cv MM MM 5M eM MM vM MM NM _M
chN _vON ovoN aMcN MMON hMcN eMcN MMoN vMON MMoN NMcN _MON eMoN oNcN ”NON hNON eNcN MNoN vNoN MNcN NNcN

93:88 mam—«Sq. £8288. H x6583.

 

 

 

 

 

NheN MMeN oheN NweN eweN aweN MaeN eaeN ochN MobN bosN __hN v_bN M_5N _veN eamN thN NMbN MMhN aMnN thN
MeMM heMM ebMM vbMM hhMM _MMM vaM MMMM ~aMM maMM waMM chM movM ocvM NMMM vMNM chM MNvM thM OMvM vaM
Mvm wvm wvm Mvm wvm wvw wvm wvm wvw wvm wvm wvn wvm wvm oNe use ave Mvm wvm Mvw wvm
wvn wvm Mvm wvm wvm ave wvm wvn wvm wvm Mvm Mvm wvm Mvm mNe hue wvm wvm wvm wvm wvm
_ _ _ _ _ _ _ _ _ — _ _ _ _ _ ~ _ _ _ ~ _
wvm wvm Mvm wvn wvm wvm wvm Mvm Mvn wvm Mvm Mvm wvm wvm aNe use Mvm wvn wvm Mvm wvm
_w MN—
ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev ev
o_N o_N o_N o_N o_N o_N o_N o_N c_N o_N o_N o_N c_N c_N o_N o_N o_N o_N o_N c_N o_N
MMN MaN MoN MmN MaN MMN MaN MaN MmN MaN MoN MMN MMN MaN MaN MMN MoN MaN MoN MaN MaN
2
,0
cNNM vNNM hNNM _MNM vMNM MMNM _vNM mvNM vaM NMNM MMNM oMNM NeNM eeNM cNNM MhNM vNNM owNM vMNM vMNM ~aNM
N_oM m_oM o_¢M NNmM eNmM aNoM MMaM eMaM cvoM MvaM nvMM omaM vmaM hMaM .eaM veMM MeaM _hoM mnaM ahoM NMMM
e e e e e e e e e e e e e e e e e e e e e
vmv vmv mmv mmv mmv emv emv nmv hmv bmv va wmv va amv amv amv cev oev oev flev _ev
M M M M M M M M M M M M M M M M M M M M M
uvM_ va_ oMM_ _MM_ MMM_ vMM_ eMM_ NMM_ owM_ oeM_ NeM— MeM_ meM_ eeM_ weM_ meM_ _NM_ MnM_ th_ ewM_ N>M_
mc_N Mo_N mo_N ho_m mo_m o__N N__N M__N M__N h__N w__N om_N NN_N MN_N mN_N eN_N MN_N OM~N _M_N MM_N vM_N
Nb _5 cu oe we be ee Me ve Me Ne _e oe am am hm em mm vn Mn NM
MeON NeON _eoN onN MMON ”MON bmoN emoN MMON vch MmoN NnON _MON cmoN avON Mch bvoN evON mch vaN MvON

3.288 main—5. omanoom _ iguana...

8.80016»? omEocoom _ 530%?

 

 

 

 

vmeN MmeN _eeN meeN weeN
vaM avMM NMMM eMMM ceMM
wvm Mvm wvm Mvm wvm
wvm wvm wvn wvn wvn
_ _ _ _ _
wvn Mvm wvn wvm Mvm
ev ev ev ev ev
c_N c_N o_N o_N o_N
MaN MoN MaN MaN MoN
NONM eONM c_NM M_NM >_NM
vawM haMM _oaM voaM MooM
e e e e e
va an va va vnv
M M M M M
oMM_ _vM_ NvM_ va_ va_
Moom noom hMON MoON oo_N
55 ev Mb vb Mb
MecN heON eeoN mecN vecN

63

 

 

 

 

€808 0_e=0v=o<vw.o_ m_ 00E 00003 NNd 3M2- $e 8 >mz
eNS 3o- 53. :vm MON” R: aeMe M. 3. eg— 83 an _N ed mucocom 002 30080005
v. M- EN- aMN- :3. age «won ewom emaN v2: eNS 3.0. v. 3e E0c0m ~02
NMM MNM MMM Qth N_ 2. 33 when .NvM 32 N52 an _ N 0:923- £33080 3580.8:—
NMM MNM MMM anv N_ 2. ewve when _NvM 32 N52 an _N 80:50:30 :oeacfi 00%
_ _ _ _ _ _ _ _ _ _ _ 8800 08,533 82%.:
N_ M 8m eon :.vv age ”Mom ewom emaN v2: eNS hee_ ed 3000 30,—.
380 50800033.
a e M 080 8250000 .0003 23m
o _ N 2 N 3 N 003%:0axm .0583; .0552.
MaN MoN MoN 380 0020:8502
8N M2 ev a o o o o 808% 5:80:00 8m 00 n. 5:80qu
mmv vwo N3 MMM Mav a: :L MMN 5:098:00 Eun— 08 00..— 0208395
MM o c o 3300 .C0>=0Q 0030a—
mw. 2 _ cM e 839$ .033 Sn #60 8:030:00 60.505
oMN_ was 8N ov 5009mm 5:80:00 .5» 3.00 00:85:00 8005
eoN Nve _Ne bvm _NM 52 _: 800 00m «80 5325300 000.50:—
eno. FNv MM _v eveM NSN a: Mvn Ema 08 080 530.5200 8th
$2 $80 2.080580% 6:0 033003.000 EB..—
EHZ 8::5 $80
Mov. amv. va. 3e. 3e. 3e. 3e- 3e. 3e. 5e- c 8e0=0m 708080005
wag NMN ueN o o c o o c o 3e v. _ me 0E0=0m =30...
ovm odvm 052 3035.5 06 .3 003000 3:85
_M_ v42 Eat—08.308.—
e e e o o o o o o o o 020> scrap—00.. w58000£
om cm 2 o o o o o o o o 883 0.83.5 0585 .88 m£>~m
M M M o o o o o o o c 0039* 0.0m
3 M N. 3 o o o c o c c o 0m: 0803 .0505:—
8 2 _ m: o o o 0 o c c o 8: 883 .8852
2 a w b e n v M N _ c 80.85 30>—0:0 332.3...—
ScN SON 32 M33 32 eo3 32 v3. Mofl Nae 32 3223

000% 3890M— :om .x; 00 Ban 05 mo MoQfloEm N x3593.

64

 

Om—N _OMN MOMN ONVN VOVN NMVN OONN MOON ONO. OMN_ Obm_ va_ OO__ NOO— NOM ham hhM hO_ Om- NON- OMM- OMB-
_MMN NMoM OMOM _N_M MM_M MN_M «MON OMMN h_ON NVVN NONN nhON MMM_ MOO- VOV- OMN_ MOOO MMM OMO O_v MN. Ow.
m_h MVM Own Own Own MVM Men Men own vwm .vM _vm NMM MMM NMm OMM MNM MNM ONM MMM _vw OMM
m_h Mum Own Own Own Mvn Own Own own wen _VM _vm MMM MMM NMn OMM MNM nNn ONM MMM _vM OMM

n_h Mvm Own Mvn Mew Mew Own wvn OVM va .vM _vm MMM MMM NMM OMM MNM MNM NNM ONm h_m v_n

NO—

Ov e: c: we 0: cc cw nv Mv _v OM OM VM NM OM MN mN NN ON h_ v. N—
O_N O_N O_N O_N O-N O_N O_N O_N O_N O_N O_N O_N O_N O_N O_N O_N O_N O_N O-N O_N O_N O_N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON

MMMN OOON MVON MMON N—OM _MON M_MN MVON NMVN VONN N__N mNO. MMN_ MMM_ MMM_ MN__ MoO NOO new MMN N MVN.
OOMM OOOM MMOM OOOM VONM NNOM OOMM NMMM MO_M MOON MOON O_ON MNVN MNNN ONON O_M_ OOM~ MMM_ wm__ OMO vac me:

O O O O O O O O O O O O O O O O O O O O O O
we: no: we: MOV aw: New _v: O_v MOM «MM _nM MNM MOM OMN VMN MNN mO~ N>_ mv_ M__ OO OO
M M M M M M M M M M M M M M M M M M M M M M
OM__ Mv__ Om__ 00—. NM__ Mb__ _N__ MOO. N_O_ Omo MOM MM» nub v.5 owe MOM _VM va NMM OOM O_N M:—
Owo_ OMO. NOON MNON VOON NNON MMO_ _vm_ m¢h_ ovo— va_ NVV. MMM_ ONN_ v___ OOO _mw Own MNO NOW MNM OMN

NM _M OM ON ON MN ON MN vN MN NN _N ON O_ M_ b— O_ m— v— M— N_ ~—
MNON NNON _NON ONON O_ON M_ON h_ON O~ON M_ON v_ON MOON N—ON __ON O—ON OOON MOON MOON OOON MOON VOON MOON NOON

.9088 an: 08%: mom :0 a can 20 0o 5:22.00 N $803

65

 

 

 

 

OOM. MOO. MMO. NNO. OON. .VN. MNN. O.M. VVM_ ONM. M.O. MVO. NMO. 0.0N .MON MMON ON.N vM.N OM.N MNNN NMNN NONN
OONN VONN ONMN MOMN MOMN NMvN NOVN .OMN OMMN ONMN MOON OMON MNON MONN NVNN NNNN ..MN OVMN OMMN v.ON OVON MMON
MVM MvM MOM MVM MvM MvM MvM MvM MvM MvM MOM MVM MVM MvM MOM MVM MOM MvM MVM MvM MVM MVM
MOM MvM MvM MVM MvM MVM MVM MvM MOM MvM MVM MOM MvM MvM MVM MVM MOM MOM MVM MvM MvM MVM
. . . . _ . . . _ . . . — . . . . . . . . .
MvM MvM MVM MOM MVM MvM MOM MvM MvM MOM MvM MVM MvM MOM MvM MOM MvM MvM MVM MVM MVM MOM
O: O: Ov Ov O: O: Ov Ov O: O: O: Ov O? O: Ow O: Ov Ov O: O: O: O:
O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O_N O.N O.N O.N O.N O.N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON
N..N NM.N OM.N ONNN MMNN OMNN VNMN MMMN MOMN NNVN NOVN OOVN OMMN MOMN OOMN VMON MOON MONN NMNN .NNN OOMN OOMN
MOMN MVMN NNMN N.ON OVON .MON M.OM OMOM OMOM O..M MM.M NM.M NNNM OMNM .ONM MNMM OOMM VOMM MNvM MOVM NOVM NMMM
O O O O O O O O O O O O O O O O O O O O O O
OO: .Ov .Ov .Ov NOV NOV NO: MOv MOv MOv VOv VOO VOV MO: MOv MOv OOO OOv OOV NOV NOV NO:
M M M M M M M M M M M M M M M M M M M M M M
OMM NOM MNM NMM OOO M.O MNO MMO .MO VOO ONO OMO NOO. M.O. NNO. OOO. MMO. OOO. ONO. .OO. VO.. N...
OMO. ..M. NMM. vMM. MNM. NOM. M.O. OOO. .OO. NMO. VON. MNN. NON. MON. OMN. _.M. NMM. MMM. VNM. OOM. N.O. MMO.
vM MM NM .M OM Ov Mv N: O: Mv V? Mv N: .v Ov OM MM NM OM MM vM MM
MVON vaN MOON NVON .VON OVON OMON MMON NMON OMON MMON .vMON MMON NMON .MON OmON ONON MNON NNON ONON MNON VNON

.6088 33. 0.8%: :3 Ox... 3 ES 20 0o 38.050 a 55%.:

66

 

 

 

 

 

ONM M.O MOO NMO N.O. .MO. OMO. ON.. MM.. OM.. ONN. MMN. MON. NNM. NOM. OOM. ONM. MON. OOM. OMM.
ONM. MOO. OMO. ONO. MON. MON. NNN. N.M. OOM. .MM. M.O. OMO. OMO. 0.0N MMON MMON M.ON OOO. .O.N ONNN
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MMO M.N MOM MOM
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MMO M.N MOM MOM
. . . . . . . . . . . . . . . . . . . .
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MMO M.N MOM MOM
OO. NO.
OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO
O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON mON MON MON
NNO. NOO. OOO. .MM. MOM. OOO. OMO. OOO. MON. MMN. NNN. NOM. .OM. ONM. 0.0. MOO. ONO. 0.0N MOON MMON
O..N MM.N MM.N NNNN NMNN .ONN ONMN OOMN MOMN ONON OOON MOON MMMN NOMN NOON OMON .NON MONN OONN ONNN
O O O O O O O O O O O O O O O O O O O O
MMO OMO OMO OMO MMO MMO MMO OMO OMO NMO NMO NMO MMO MMO MMO OMO OMO OMO OOO OOO
M M M M M M M M M M M M M M M M M M M M
OOM ..O ONO OMO OOO .OO ONO OMO OOO ..N ONN OMN OON NON ONN NMN OON N.M ONM NMM
NMO. ONO. .O.. NM.. OO.. OO.. NM.. OON. .MN. NMN. ONN. MON. N.M. OMM. OOM. NMM. MOO. MNO. OOO. MOO.
ON MN NN .N ON OO MO NO OO MO OO MO NO .O OO OM MM NM OM MM
MOON OOON MOON NOON .OON OOON OMON MMON NMON OMON MMON OMON MMON NMON .MON OMON OOON MOON NOON OOON

$.88 23. 0.8%: :8 O... a can 20 .o 5:20:00 N 522.3.

67

 

.8080. as. 0.8%: :8 O... a can 05 .o 58.2.00 N 523?.

 

 

 

 

MNN O.M OOM
NOO. .OM. OMM.
MOM MOM MOM
MOM MOM MOM
. . .
MOM MOM MOM
OO OO OO
O.N O.N O.N
MON MON MON
ONM. MMM. MOM.
M.ON OMON OMON
O O O
NMO MMO MMO
M M M
NOM ONM NMM
NOO 0.0. OMO.
NN ON MN
MOON NOON OOON

68

 

:32: 05:00:93.2 0. 8:: :28, 2.0 ONNNN- $0 0.: >02

 

 

 

 

NMO- OOO- NNO- NNMO NMOO. MN.O NNOM OM. M ONMN MOmN NOMN O 5.005 :02 5:080:05
OON- M MN- MON- N. MM MOOO- MMNN N. OO MOMM NOM. M M M . M NO. .OO :O0:0m :07.
NMM ONM MMM OM .O MONO .MOM .M MN MOOO MMO. OMO. NOMN 505.3- 5.260.50 5:050:05
NMM ONM M MM OM.O MONO .MOM .MMN MOOO MMO. OMO. NOMN 0:05.030: 55:5 :0...<
. . . . . . . . . . . :38. 0:05:53 0000...:
N. M OOM OOM N . MM MOOO MMNN N.OO MOMM NOM. MM M. NO. N O 8000 .80...
.OM . OO.N OON. ONM. NMM NNM MOM OOM .000 5.85500 ..0 ::._:0>O
8000 50500033.
O O M .000 05:50:: :88» 0.95
O . N O . N O. N 05.05%”. .05080n. .0:::<
MON MON MON 0.000 00:50:50.).
.ON MM. OO O O O O O 50:93 5:80:00 :0.. 00 “. 5.08505
M MO OMO NMO MMM MOO ON. .N. MNN 5.005050 500 5.. 00.”. 5.858..
OM O O O 00300 b0>..0n. 030:.
MM. O. . OM O 5000.8 030:. :0... .000 5.00.5500 50:65
OMN. MON OON OO 50.0% 5:80:00 :0.. .000 55:50:00 80:5
OON NOO .NO NOM .NM N. . . . . 5n. :0... .000 5.005050 58:05
ONO. NNNO OM. O OOOM NO. N ONN MON 500 :0.. .000 55.5050 000:5
OMM. $50 8050.500”. .05 5.0.8.500 05-.
.OO-Z 5....5. $000
0.0- 0.0- OOM- .OO. .OO. .OO. .OO. .OO. .OO. .OO. O $505M. 5:050:05
NNN MNN MON O O O O O O O .OO .OO £05m .000..-
OOM OOM .000. 00:55:. 0... .3 00.080 0:..000M.
.M. .M. 0:.0> 50.50..-
0 0 0 o o o o o 0 o o 05> 00:00:00: 05880:.
OM OM .M O O O O O O O O :88» M555. M505 :5. 5.2%
M M M O O O O O O O O 030:. 0.0M
..O ..O OO 0 0 0 0 0 0 0 0 0m: :80? .0555
OM. OM. NO. 0 0 0 0 0 0 0 0 0...: 0:03 30.0.5.2
.OON OOON OOO. MOO. NOO. OOO. MOO. OOO. mOO. NOO. .OO. 505.3 0.9.5.; 0.5055

.3000 5.00550 0:. ..0 5.030 M 5.05%.»:

69

 

O.MN O.MN MNMN ONMN MONN OMMN MOMN OONN 0.0N O.M. 0.0. N.O. NON. NMO NON MMM MOM OO OM.- OMO. MOO.
NOMM O.MM O.MM N.MM OMOM ONNM OMOM OOON MONN ..MN MOMN OO.N OOM. MNO. MMO. NNN. OOO. MON MNM ONN ON

MOM MOM MOM MOM MOM MOM MOM OOM OOM .OM .OM NMM MMM NMM OMM MNM MNM ONM MMM .OM OMM
MOM MOM MOM MOM MOM MOM MOM OOM OOM .OM .OM NMM MMM NMM OMM MNM MNM ONM MMM .OM OMM

MOM MOM MOM MOM MOM MOM MOM OOM OOM .OM .OM NMM MMM NMM OMM MNM MNM NNM ONM N.M O.M

OO OO OO OO OO OO MO MO .O OM OM OM NM OM NN MN NN ON N. O. N.
O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON

OOMM MOMM .NMM ONMM O.MM MM.M MOON MMNN OOMN .OMN NM.N OOO. NMN. O.M. NON. MOO. MMM OOM .MM .O. NM.-
MMOO OMOO NOOO OOOO MOOO ONMM NMOM OOOM .MNM NMOM OOMN .OON MNON ..NN MMO. OMN. MNM. OMN. MOO. mON MMM

O O O O O O O O O O O O O O O O O O O O O
MOO MOO MOO OOO NOO .OO 0.0 NOM ONM .MM NNM mOM ONN OMN MNN MO. NN. MO. M.. OO OO
M M M M M M M M M M M M M M M M M M M M M
M.O. M.O. 0.0. M.O. OOM. MMM. ONN. OON. OM.. NOO. OOO ONO OMM ONN OOO MOO OOM MOO OOM ONN OO.
OO.N NO.N MO.N ON.N MM.N OMON OMO. OMM. NMN. MNO. O.M. MOO. .ON. ON.. MMO. NOO NON OOO NOM M.O ONN

NNON .NON ONON 0.0N M.ON N.ON 0.0N M.ON 0.0N M.ON N.ON ..ON 0.0N OOON MOON NOON OOON MOON OOON MOON NOON

50.500. 3000 5.83300 0... ..0 SE0>O M 50:09.?

70

 

 

 

 

NONN OONN OONN MMNN OMNN OONN MONN NONN ONNN ONNN NNNN .MNN OMNN MMNN .ONN MONN MONN NOMN MOMN OOMN MMON
OMOM NMOM .OOM OOOM MOOM .MOM MMOM MMOM NOOM MOOM OOOM NNOM ONOM ONOM MMOM OMOM OOOM MOOM NOOM OOMM MNMM
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM NNO
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM NNO
. . . . . . . . . . . . . . . . . . . . .
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM NNO
ON.
OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO
O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON
.ONM OONM MONM .OMM MOMM MOMM N.MM M.MM O.MM NNMM ONMM ONMM MMMM OMMM OOMM MOMM NOMM OMMM OMMM NMMM .OMM
NMOM OMOM OMOM MOOM OOOM OOOO MOOO NOOO 0.00 0.00 N.OO .NOO ONOO MNOO .MOO MMOO MMOO NOOO MOOO MOOO NMOO
O O O O O O O O O O O O O O O O O O O O O
.OO .OO NOO NOO NOO MOO MOO MOO OOO OOO OOO MOO MOO MOO OOO OOO OOO NOO NOO NOO MOO
M M M M M M M M M M M M M M M M M M M M M
NNM. ONM. .MM. NMM. OMM. MMM. NMM. OMM. OOM. NOM. OOM. MOM. NOM. OOM. .OO. NOO. OOO. OOO. NOO. OOO. ..O.
OM.N OM.N MM.N OM.N .O.N NO.N OO.N MO.N NO.N MO.N OM.N .M.N MM.N OM.N OM.N NM.N OM.N OO.N .O.N MO.N OO.N
MOON NOON .OON OOON OMON MMON NMON OMON MMON OMON MMON NMON .MON OMON ONON MNON NNON ONON MNON ONON MNON

..O..:00O 3000 8.8.5900 05 .0 ::::0>O M 5.50%?

71

 

 

 

 

MOON NNON MNON ONON NMON OMON OMON MOON OOON OONN MONN NONN ..NN O.NN M.NN .OON OOMN MNNN NMNN MMNN OMNN
OOMM MOMM NOMM ONMM ONMM NNMM .MMM OMMM MMMM .OMM MOMM MOMM NOOM MOOM OOOM NMMM NMNM ONOM MNOM NNOM OMOM
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM ONO NNO MOM MOM MOM MOM
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM ONO NNO MOM MOM MOM MOM
. . . . . . . . . . . . . . . . . . . . .
MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM MOM ONO NNO MOM MOM MOM MOM
.M ON.

OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO OO
O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON
N.NM ONNM ONNM NNNM .MNM OMNM MMNM .ONM MONM MONM NMNM MMNM OMNM NONM OONM ONNM MNNM NNNM OMNM OMNM NMNM
MOOM N.OM M.OM 0.0M NNOM ONOM ONOM MMOM OMOM OOOM MOOM NOOM OMOM OMOM NMOM .OOM OOOM MOOM .NOM MNOM ONOM
O O O O O O O O O O O O O O O O O O O O O
OMO OMO OMO MMO MMO MMO OMO OMO NMO NMO NMO MMO MMO MMO OMO OMO OMO OOO OOO OOO .OO
M M M M M M M M M M M M M M M M M M M M M
MOM. NOM. MOM. OMM. .MM. MMM. OMM. OMM. NMM. OMM. OOM. NOM. MOM. MOM. OOM. MOM. OOM. .NM. MNM. ONM. ONM.
OO.N NO.N MO.N MO.N NO.N MO.N O..N N..N M..N M..N N..N M..N ON.N NN.N MN.N MN.N ON.N MN.N OM.N .M.N MM.N
OOON MOON NOON .OON OOON OMON MMON NMON OMON MMON OMON MMON NMON .MON OMON OOON MOON NOON OOON MOON OOON

$0.500. 3000 5:030:00 0... ..0 §::0>O M 03.0:sz

72

3.28an 380 8.8.5300 05 O0 5525 M M.O:ommxx

 

 

 

 

OMON MMON .OON MOON
MOMM OOMM NMMM OMMM
MOM MOM MOM MOM
MOM MOM MOM MOM
. . . .
MOM MOM MOM MOM
OO OO OO OO
O.N O.N O.N O.N
MON MON MON MON
NONM OONM O.NM M.NM
OOMM OOMM .OOM OOOM
O O O O
NMO MMO MMO MMO
M M M M
OMM. .OM. NOM. OOM.
MOON MOON OOON MOON
MOON OOON OOON MOON

73

C32: o.n=o.=o.\OM.O. m. 8.8. .033 NOO MOMO... o\oO a >n.Z

 

 

 

88- m8- .8. :3. 8m. 2.: $8 a; 82 m8. 8; o... 388mg .3858...
83. ..N- c :3. 8% 88. 88 88 E... 8.: mg. .18 2.2.3 82
N8 8% o 8:. NE 88 88 .NOM 8m. NR. 88 ..8...§-...§.88.5888...
N8 8% o 8:. NE 88 88 .NOM 8N. NR. 3.5 .888...“ 88:58.2
. . . . . . . . . . . 8...... 888...... 88:...
N: 88 o :3 8% 8% £8 88 E... 8... S... o... 88.8,.
880 28898.3”.
a O “moo «fies—.MOO... .833 0.3m
O.N ea 23.80qu .0808. .88...
8m 8a 380 3888...).
.8 m... 8 a o o c c 52% 88880 8. 8. 8888..
m2 .8 m8 8.. 8.. 8. E .8 88.588 58 8. 8. 8:88...
on o o o 8.80 82.8 8.8..
m... 2. on O .80 8.82.88 82......
8.”. 8. 8m 8 53% 88.2.8 8. .80 883.88 825
8m 3 .8 3 .NM 2 . . .. .80 88.588 82......
2... RS 8.... 88 SE at m: 898.80 88.588825
OMM. $80 2.080.383. .28 5:62.33. O5).
.52 8.....5 88
2? 8m- .8. .8. .8. .8. .8. .8. .8. .8- o 388m .8888...
mm. 8m o o c c o o c o .8 3% 388m 8....
8m .88 .8. 8.88... 2.. 3 8.88 388m
..N. .O. . n. 28> .889.
o c o o o o o o c o .. 28> 8.882 3822..
on .m o o o c o o e o o 8...; 8.8.5 8...... =8. 888
m m o c o o o c o c o 88.. 0.8m
8 8 c c c o o o o o o a: .83 888...
a. 8. o o o o o c o c o 3... 883 8.0.8.).
.52 8....2. 388m
.8... 88 88. ”8. 8... 82 m8. 8... m8. N8. .8. 8......» 8.8.8... 352.8.—

..oo ..O... 05 ..0 Mafia. 30> 2.0 O £9.25...

74

 

 

 

o.wN MNON ONON thN vme hOMN bONN v.ON 5.”. 0.0. OOV. OON. nwo web mmm OOm OO vu.- va. NOO- Oma-
O.mm v.mm h.mm Omen Oth OOOM OOON nOhN aOmN hOmN OO.N .OO. Ono. Omv. VNN. boo .Ob ONm mnN w. NVN-
awn awn Own wen awn Own new OVm QVn .Vm .Vn hmw mmm Nmm Omn wNn mNm ONn nmm .Vn Own
”Wm new Own new awn Own Own Own VVm .Vm .vn 5mm mmm Nmn Omm wNm mNm ONm mmm .vW Own
. . . . . . . . . . . . . . . . . . . . .
wvm Own Own Own wvm wvn OVm own vvn .vW .vm hmm mmn Nmm Omm wNw nNm NNm ONn h.m v.m
ow 0v Ow Ow Ow ow mv MV .9 an an Vm Nm Om 5N nN NN ON 5. v. N.
O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N
MON MON MON MON MON maN MON MON NON MON mON MON mON mON MON MON MON mON mON MON mON
OOMM .bmm whmm O.mm MM.M mVON mth OOmN .OMN hw.N Ova. th. O.m. hON. mOO. mm» vam .mm .O. hm.- o.v.
amov NOOv OOOV OOOV VNwm hmom OVVM .mNm NnOm vaN .VON ONVN ..NN «ma. emu. mNm. OON. MVO. mow wmm NNN
O O O O O O O O O O O O O O O O O O O O O
wow wow GOV NOV .vv a.v mom chm .mm bNm mOm OBN VmN ONN no. Nb. we. w.. OO OO Om
m m m m m m m m m m m m m m m m m m m m m
w.v_ O.v. w.v. mom. nmm_ ONN. VON. Om__ NOO. OOO ONO Omw Ohm OOO wvo Own new OOM ONN OO. #0
NO_N wO_N On_N OM.N OmON OMO. Omw. Nmn. mNO. O.w. WO¢_ .ON. w>_. mmO. NOO non OOO new w.v OhN Om.
NNON .NON ONON ¢.ON w.ON h.ON 0.0N n.ON v.ON M.ON N.ON ..ON 0.0N OOON «OON hOON OOON mOON VOON MOON NOON

..O..:oUO 80.0.... o... .0 Exam. 80> 2.0 v 2.2.9.9...

75

 

 

 

OQON OVON MOON OOON OOON MOON OOON OOON OOON OOON .MON vwhN MOON .OON OOON OOON NOMN OOMN OOMN N.ON OMON
thM .va VVVM wva .MOM MOOM MMVM NOOM mOvM OOVM NOVM OOOM OOVM vaM OOOM OOvM MOvM hOvM OOOM VOOM MOMM
Mvm new awn Own Own Own wvm awn wvn new new Own Own wen awn Own MOO new Own new OOO
Mvm Own new Own Own Own wen Own wvm Own Own Own OOO Own awn Own wvm Own wvm Own OOO
. . . . . . . . . . . . . . . . . . . . .
Own Own wen Own wvm Own wen Own wvm wvm Own new Own Own wen wvm Own Own Own new OOO
ON.
Ov Ow Ov Ow Ow Ov Ov Ov Ov Ov OV Ov Ov Ov Ov Ov Ov Ov Ov Ov Ov
O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N O.N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON
VONM OONM .OMM MOMM MOMM N.MM O.MM O.MM NNMM ONMM ONMM MMMM OMMM OVMM MVMM OOMM OOMM vOMM OMMM .OMM VOMM
OMOM OOOM MOOM OOOM OOOV MOOV OOOv 0.0v v.OV M.Ov .NOv VNOv ”NOV .MOV MMOV MMOV Nvov mvov ”vow NMOv mmOv
O O O O O O O O O O O O O O O O O O O O O
.Ov NOV NOV NOV MOv MOv MOv «Ow va VOv MOO MOv nOv OOv OOv OOv hOv hOv OOv wOv MOO
M M M M M M M M M M M M M M M M M M M M M
OOM. .MM. NMM. «MM. OMM. OMM. OMM. OOM. NOM. «OM. MOM. OOM. OOM. _Ov_ NOV. vow. OOO. bow. OOO. ..v. M.O.
OM.N OM.N OM.N .O.N MO.N vv.N OO.N OO.N MO.N OM.N .M.N MM.N OO.N OM.N NO.N OM.N OO.N .O.N MO.N OO.N OO.N
MvON N¢ON .OON OVON OmON MMON OMON OMON MMON vMON MMON NMON .MON OMON ONON ONON ONON ONON ONON VNON MNON

.9328an 83.0.... o... ..o $.09 30> 2.0 v x€cam<

76

 

 

 

NNON MFON OOON NOON OMON OOON MOON OOON OOON MOhN OOON __ON V_bN ”—5N _NhN VVON OOON NMON OMNN OMON NVhN
MOMM OOMM OBMM VhMM OOMM _OMM VOMM OOMM _OMM OOMM OOMM NOVM OOVM OOVM N_VM OMMM _ONM MNVM ONVM OMVM VMVM
me OVO OVM an OVO OVO me OVO OVO me me me an me an ONO OOO OVM me OVO an
OVM MVM me an me me MVO OVO OVO OVO an wVO wVw OVO me ONO OOO wVO OVO OVO OVO
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ — _ _
an OVO OVO an me an an MVO me MVO me an me MVM OVO ONO NOO OVM OVO OVM me
_w ON—

OV OV OV OV OV OV OV OV OV OV OV OV OV OV OV OV OV OV OV OV OV
O_N O_N O_N O_N O_N O_N O_N O_N O_N O_N O.N O_N O.N O_N O.N O_N O—N O_N O_N O_N O.N
MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON MON
ONNM VNNM hNNM _MNM VMNM OMNM .VNM mVNM wVNM NONM MONM OONM NONM OONM OONM MONM OONM OONM VwNM OONM .ONM
N_OM n—OM O_OM NNOM ONOM ONOM MMOM OMOM OVOM MVOM hVOM OOOM VOOM NOOM .OOM VOOM OOOM _hOM OOOM ONOM NOOM
O O O O O O O O O O O O O O O O O O O O O
VOV VOV MOV OmV mmV OOV OmV NOV hmV NOV MmV me me OmV OmV OOV OOV OOV OOV .OV _OV
M M M M M M M M M M M M M M M M M M M M M
hVM. wVM_ OOM_ _MM_ MMM_ VMM_ OMM. an_ OMM_ OOM. NOM_ MOM. OOM. OOMO wOM_ OOM. _NM_ MNM. VBM_ ONM. NMM—
NO_N MO_N OO.N nO_N wO_N O__N N__N M__N m__N h__N w__N ON.N NN.N MN.N MN_N ON_N ON_N OM_N .M.N MM.N VM_N
VOON MOON NOON _OON OOON OOON OOON hnON OOON OOON VOON MOON NMON _OON OOON OVON OVON hVON OVON OVON VVON

€388 “8.85 05 .8 38 H8» 25 v 389?

77

AOL—SUV «83$ 05 mo Nam—om 30> 0:0 V 53.0%?

 

 

 

VOON OOON _OON OOON OOON
OVMM OVMM NOMM OOMM OOMM
OVO wVO wVO wVO wVO
wVO wVO wVO wVO wVO
_ _ _ _ _
MVO MVO wVO wVO wVO
OV OV OV OV OV
O—N O_N O_N O_N O_N
MON MON MON MON MON
NONM OONM O_NM M_NM O.NM
VOwM OOOM _OOM VOOM OOOM
O O O O O
NOV MOV MOV MOV VOV
M M M M M
OMM. ~VM. NVM_ VVM. OVM—
MOON OOON NOON OOON OO_N
OOON OOON OOON OOON OOON

78

REFERENCES

Adams, W. (2000). The social impact of large dams: Equity and distribution issues.Cape
Town: The World Commissions on Dams.

Adler, M. (2006). New foundation of cost-benefit analysis. Cambridge, MA: Harvard
University Press.

Asian Development Bank (2002). Study of large dam and recommendation practice.
Philippine: Asian Development Bank.

Aylward, B., Berkhoff, J ., Green, C., Gutman, P., Lagman, A., Manion, M., Markandya,
A., McKenney, B., Naudascher- Jankowski, K., Oud, B., Penman, A., Porter, 8.,
Rajapakse, C., Southgate, D., & Unsworth. R., (2000). Financial, economic and
distributional analysis. Cape Town: The World Commissions on Dams.

Bartolome, L. J ., de Wet, C., Mander, H., & Nagraj, V. K. (2000). Displacement,
resettlement, rehabilitation, reparation, and development. Cape Town: The World
Commissions on Dams.

Barbier, E. B. (2000). Valuing the environment as input: Review of applications to
mangrove fishery linkages. Ecological Economics, 35, 47—61.

Bacon, R. W., & Besant-Jones, J. E. (1998). Estimating construction costs and schedules:
Experiences with power generation project in developing countries. Energy Policy,
26, 317-333.

Belli, P. (2001). Economic analysis of investment operation-analytical tools and
application. Washington DC: The World Bank.

Berkamp, G, McCartney, M., Dugan, P., McNeely, J ., & Acreman, M. (2000). Dams,
ecosystem functions and environmental restoration. Cape Town: The World
Commissions on Dams.

Boardman, A. E., Greenberg, D. H., Vining, A. R., & Weimer, D. L. (2001). Cost-benefit
analysis: Concepts and practice. Upper Saddle River, NJ: Prentice Hall.

Central Weather Bureau (2008). Knowing the earthquake in Taiwan. Taipei, Taiwan:
CWB.

Cheng. T. (2004). The life cycle assessment of dams in Taiwan. Taipei, Taiwan: National
Taiwan University.

Chutubtim, P. (2001). Guidelines for conducting extended cost-benefit analysis of dam
projects in Thailand. Singapore: EEPSEA.

79

 

Cline, W. R. (1999). Discounting for the very long term: In discounting and
intergenerational equity. Washington DC: Resources for the Future.

Costanza, R., d’Arge, R., de Groot, R., Farber, S., Grasso, M., Hannon, B., Limburg, K.,
Naeem, S., O’Neill, R. V., Paruelo, J ., Raskin, R. G., Sutton, P., & van den Belt, M.
(1997). The value of the world’s ecosystem services and natural capital. Nature,
387, 253-260.

Crawford, E. (2006). Note on benefit cost analysis. Class handout.

Economic Co-Operation and Development (2004). Regulatory Impact Analysis (RIA)
inventory, internal document. Paris: OECD.

Farber, S. C., Costanza, R., & Wilson, M. (2002). Economic and ecological concepts for
valuing ecosystem services. Ecological Economic, 41, 375-392.

Gittinger, J. P. (1982). Economic analysis of agricultural projects. Washington DC: John
Hopkins University Press.

Hanley, N., & Spash, C. (1993). Cost-benefit analysis and the environment. Northampton,
MA: Edward Elgar Publishing, Inc.

Huang (2004). The research of water resource cost in Taiwan: From a viewpoint of green
accounting. Taichung, Taiwan: F eng Chia University.

International Commission on Large Dam (1999). Benefit and concerns about dams. Paris:
ICOLD.

Jager, H. I., & Smith, B. T., (2008). Sustainable reservoir operation: Can we generate
hydropower and preserve ecosystem values? River Research and Application, 24,
340-352.

Kaohsiung City Government (2009). Discover Kaohsiung City. Kaohsiung, Taiwan: KCG

Ke, A. (2005). The necessity of water market in Taiwan. Kaohsiung, Taiwan: National
Sun-Ye Shih University.

Liu, K. (2003). Estimate recreation benefit of A-Li mountain forest recreation area by
contingent valuation method and travel cost method. Chiayi, Taiwan: National
Chiayi University.

Markandya, A., & Pearce, D. (1988). Environmental considerations and the choice of the

discount rate in developing countries. Environment Department Working Paper
No. 3. Washington DC: The World Bank Policy Planning and Research Staff.

80

Mei-Nong People Assosiation (1999). The reason to oppose Mei-Nong Dam Project.
Kaohsiung, Taiwan: MPA.

Mei-Nong Township Administration (2004). The beauty of Mei-Nong. Kaohsiung,
Taiwan: MPA.

Mikesell, R. F. (1977). Rate of discount for evaluating public projects. Washington DC:
American Enterprise Institute for Public Policy Research.

Mitchell, R., & Carson, R. (1989). Using surveys to value public goods: The contingent
valuation method. Washington DC: Johns Hopkins University Press for Resources
for the Future.

Morimoto, R., & Hope, C. (2004). A CBA model of a hydro project in Sri Lanka.
International Journal of Global Energy Issues, 21, 47-68.

Pearce, D., Atkinson, G, & Mourato, S. (2006). Cost-benefit analysis and the
environment: Recent development. Paris: OECD.

Pong, T. (1994). Use of contingent value method on dam project. Kaohsiung, Taiwan:
National Sun-Ye Shih University.

Rosa, L. P., & dos Santos, M. A. (2000). Certainty and uncertainty in the science of
greenhouse gas emissions from hydroelectric reservoirs. Cape Town: The World
Commissions on Dams.

Rosenberg, D. M., Bodaly, R. A., & Usher, P. J. (1995). Environmental and social impact
of large scale hydro-electric development: Who is listening? Global
Environmental Change, 5, 127-148.

Schmid, A. (1989). Benefit-cost analysis: A political economy approach. Boulder, CO.
West View Press.

Shah, Z., & Kumar, M. D. (2008). In the midst of the large dam controversy: Objectives,
criteria for assessing large water storages in the developing world. Water
Resource Management, 22, 1799-1824.

Sino-Tech Engineering Consultants, Ltd. (1992). Mei-Nong dam projects design and
execute report. Taipei, Taiwan: Sino-Tech Ltd.

Sullivan, M. E. (1995). The Three Gorges Dam project: The need for a comprehensive
assessment. The Georgetown International Environmental Law Review, 8, 109-
140.

Tse, H (2004). Economic valuation of water improvement in Kaohsiung City. Kaohsiung,
Taiwan: National Sun-Ye Shih Unversity.

8|

Turner, R. K., van den Bergh, J. C. J. M., Soderqvist, T., Barendregt, A., van der Straaten,
J ., Maltby, E., & van Ierland, E. C. (2000). Ecological-economic analysis of
wetlands: Scientific integration for management and policy. Ecological
Economics, 35, 7—23.

United Nation Environment Programme (2007). Guidelines for conducting economic
valuation of coastal ecosystem goods and services. New York: UNEP.

Wang, T. (2003). The study of anti-dam movement in Mei-Nong. Hsinchu, Taiwan:
National Tsing Hua University.

Water Resource Agency (1984). The construction of Mei-Nong dam project report. Taipei,
Taiwan: WRA.

Water Resource Agency (1990). The projection of water use in southern Taiwan. Taipei,
Taiwan: WRA.

Water Resource Agency (1992). Water resource development and management report in
southern Taiwan. Taipei, Taiwan: WRA.

Water Resource Agency (2004). Adjust the reasonable water price in Taiwan. Taipei,
Taiwan: WRA.

World Commissions on Dams (2000). Dams and Development: A new framework for
decision-making. London: Earthscan.

Wu, C. Y. (2007). A study of the drinking water of Kaohsiung region. Taipei, Taiwan:
National Taiwan Normal University.

Wu, Y., Chang, J ., Xu, B., Peng, C., & Ge, Y. (2008). Ecosystem services value
assessment for constructed wetlands: A case study in Hangzhou, China.
Ecological Economics, 68, 116-125.

The World Bank (1999). World development report in I 999. Washington DC: The World
Bank.

82

   

M'lllljllljjlsllLillflffllllllujjlllS