GROUP ASSIGNMENT topic 6 cost benefit analysis for a national park

Investment capitalCost million green-house construction cost is 300million VND including transparentcanopy imported fee is 150 million 1 Construction cost 2,500 dong including 10% of tar

National Economics University

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-GROUP ASSIGNMENT

Topic 6: Cost - Benefit Analysis For A National Park

Group member 1 Đinh Thúy Quỳnh (Leader) 11184218

Class Investment Economics 60

Subject Cost Benefit Analysis

Professor TS Hoàng Thu Hà

✦ HÀ NỘI - 2021 ✦

A NATIONAL PARK Table of Content

Option 1 Eco green park

check-in and have a picnic space In addition, visitors can fully enjoy the

atmosphere with outdoor activities such as cycling, jogging along the road Picture

1.1 Eco green Park

Besides, there are rows of benches so that guests can stop to avoid the sun underthe trees and enjoy the atmosphere Moreover, public wastebaskets andpropaganda slogans about preserving the environment are indispensable

Picture 1.2 Eco Green Park - preserving nature

Going straight to the center will be a bridge spanning a canal with two banks offlowers surrounding a greenhouse with a tropical landscape inside and a small lakeoccupying an empty space at the end of the greenhouse, and the larger spaceinside is a place to hold events and exhibitions

Picture 1.3 Eco Green Park - Flower garden

Furthermore, to meet the entertainment needs of visitors as well as to increaseprofits, the park can sell vending machines so that guests can buy water or fastfood.

II Identify Cost-benefit associated with the project Table 1.1 Cost-benefit

analysis

Reduce the cost Traffic noise Cost of acquiring Temporary affect

of air condition production the property the living

surroundingpeople (dust,noise pollution)Create income Create beautiful Design and

from tourism scene construction

costReduce Enhance air Operation and

stormwater quality maintenance

Create income Educational and The opportunity

from events, social benefit costs associated

exhibitions, with the loss of

communitywould havereceived if theproperty hadbeen developedfor other

purposesReduce the cost Landscaping

expenditure

III Valuing impacts

Table 1.2 Benefit(annual revenue)

The average revenue

5 Bicycle rental service 730

Children’s playground (sculpture painting,

Table 1.3 Investment capital

Cost (million

green-house construction cost is 300million VND including transparentcanopy imported fee is 150 million

1 Construction cost 2,500 dong (including 10% of tariff)

Table 1.4.1 Investment capital (labor cost)

Wage per Wage per person per person Wage per month per year year

(million (million (million

Table 1.5 The benefits and costs of the project from both private and social

perspectives

Private point view Social point view

From

year 4 Revenue 11249.55 11249.55

Greenhouseconstruction 300 286.36->

Net profit (private pointview) 7217.55

Net profit (social pointview) 8323.95

Table 1.6 The benefit and cost of the non market price

Cost of avoidance(avoid the cost ofTraffic noise soundproof wall

production decrease construction) 30

Hedonic pricing(increase the value ofthe land if the natureBeautiful scene scene is preserved) 500

Enhance the air Cost of avoidance 2

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quality (avoid air purifier)

Contingent valuationmethod (WTP

survey) - how muchRecreational activity are people willing to

(educational and pay for the public

social benefit) recreational service 0,4

Contingent valuationTemporary affect the (WTA survey) - how

living environment much are people

of surrounding willing to accept for

people (dust, noise the temporary

pollution) dust/noise pollution 3

Table 1 7 Total Cost and Benefit of the Project ( Unit: million VND)

Benefit 0,00 0,00 0,00 11782 11782 11782 11782 11782

Table 1.8 Real Cost and Benefit (Unit: million VND)

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PV -7994.91 -7536.68 -7104.71 6993.92 6593.06 6215.18 5858.96 2720.10 Accumul

ative -7994.91 -15531.59 -22636.30 -15642.38 -9049.32 -2834.14 3024.82 54650.76

NPV = 54650,76 (million VND)

NPV>0

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Option 2 Creative Park

I Concept:

A creative park where artworks are exhibited.

Citizens are probably familiar with the common type of parks that are spacious andfilled with trees as well as flowers This common design is widely popular since itserves the surrounding habitants’ need for exercising and fresh air which are thetop priorities of visitors according to a study on urban public parks of Leeduniversity However, such infrastructures are becoming a norm of every metropolis,and citizens of the modern age are subtly demanding a form of entertainment andrelaxation of a higher level In the meantime, never before witnessed a moreimpactful movement of artistic creativity in the community For that reason, Thecreative park will be a perfect solution to the matter as it provides a public space forartists and citizens to enjoys the creative works

Since there is already a tobacco factory, some minor adjustments to the existingfacility are enough This will save a great deal of public finance as no large-scaleconstruction is needed

Creative park design: Unlike other parks, this infrastructure is designed distinctively

in a very modern way under the cooperation of many artists and architects Themain theme will be the city of the future which focuses on the special design ofincluded facilities and the exhibition of artwork within the area of the park

Picture 2.1 Creative Park

In the middle of the park, the used-to-be factory will be converted to an exhibitionbuilding of which the main purpose is to exhibit artworks

Main services of this park includes:

- Parking: This service will require payment

- Public space: walk, playing, chilling area

- Exhibition: artworks, music

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- Cafe: The cafe is installed in the same building as the exhibition so visitors can enjoy the artwork while chilling

- An outdoor movie theater (available at night only)

II Identify Cost-benefit associated with the project Table 2.1 Cost-benefit

analysis

With market Non-market With market Non-market

- Revenue from - Physical and - Construction - Negativeparking service mental cost impact on the

- Revenue from contentment of - Maintenance surroundingsthe cafe shop surrounding cost during the

- Revenue from inhabitants - Management constructionthe movie - A great and operation (Temporary airtheater motivation to cost pollution)

artistic activities

of thecommunity

III Valuing impacts

1 Description

An enterprise with 40% foreign capital has a project to build a creative park where art exhibitions take place

The construction phase starts in the first 3 years and the project goes into

operation from year 4 to year 15

Project revenue comes from:

- Coffee shop: on average, 250 bills are sold per day, each bill is 70,000

Profit tax is 25%, resource tax is 7% of the revenue

Construction investment cost in the first 3 years is 500 million VND/year The

annual operating cost when the project is put into operation is 1 billion VND/year

In the first 3 years of construction, the project hires 100 workers and from the 4th year onwards hires another 25 people

- The unemployment rate is 20% and all unemployed people think their value of rest is 50 million VND/year

- The average salary per worker is 100 million VND/year

Assume that 1 year has 360 days

Table 2.2 Project financial information

Foreign capital 40%

Coffee shop/ per

day 250 bills 0,07 million VND per bill

Cinema/ per day 200 tickets 0,1 million VND per ticket

Parking area/ 40%

cars 0,05 million VND per ticket

of the

Investment cost in first 3 year 500 million VND per year

from year 4

in first 3 year 100 peoplefrom year 4

Unemploym

Value of rest 50 million VND per yearAverage

salary perpeople 100 million VND per year

fit

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Total (per year) 14742 9465,282

capital

Operation cost 1000 1000Year 4-15 Resource tax 412,776 0

Net profit = Revenue - Labor cost - Operation cost - Resource tax = 829,224

Table 2.4 The benefit and cost of the nonmarket price

VND/1ha of creative park

Annual One time Physical and Contingent valuation method 780

exhibition organization costs)

(Increasing value of the surrounding lands)

quality to the surroundings due

to trees placement in comparison with that of the tobacco factory)

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Cost Method Valued by million

VND/1ha of creative park

Annual Onetime Temporary air Contingent valuation method 10

pollution (willingness to accept

compensation to live in an environment near a construction site)

Year 1 2 3 4 5 6 7 15

Cash flow -10303,92 -10101,88 -9903,81 1559,61 1529,03 1499,04 1469,65 1254,33 Discount rate 0,96 0,92 0,89 0,85 0,82 0,79 0,76 0,56

PV -9907,62 -9339,76 -8804,45 1333,16 1256,75 1184,72 1116,81 696,49 Accumulative -9907,62 -19247,38 -28051,83 -26718,67 -25461,92 -24277,20 -23160,39 -16247,10

NPV = -16247,10 (million VND)

NPV<0

Option 3 Sport Park

I Concept:

This is a project to provide public sport space for people of all ages It is expected

to enhance citizens' physical as well as mental health, especially for children Thispark is also famous for being the ideal place to hold team building

The main facilities of this park include:

- Outdoor space:

+ Tennis courts, basketball courts, playground for pre-school and school-aged children

+ 2 picnic shelters (nearby stream)

+ Restroom building with all-gender restrooms

+ A stream where people can join kayak

+ Water fountain

- In-door sport complex

+ Artificial mountain climbing (for kids, adolescents)

+ Trampoline jumping

+ Gym

With an area of around 28 hectares, Sports Park anchors the redevelopment of theformer tobacco factory, and offers a world class destination for all interests SportsPark will provide high-quality facilities, not only for major events but also for dailyenjoyment by the community With a wide variety of sports venues, open spaces,park facilities, retail and dining outlets, it is set to be an urban oasis to meet thediverse needs of the public, and professional and amateur athletes

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Picture 3.1 Sport Park Design

Picture 3.2 Sport Park Main Facilities

II Identify Cost-benefit associated with the project Table 3.1 Identify

cost-benefit

- Income Improve the Construction Temporary airfrom the local people cost pollution

camping health

gear rental

- Provide Offer places to Maintenance Temporary noisejobs for do exercise no cost pollution

people matter what the

living weather’s like

nearby that day :D

- Income Green Operation cost

from kayak atmosphere,

rental beautiful scene

III Valuing impacts

+ Construction investment cost in the first 3 years - 1,5 billion yearly +

Cost of operation is 55 000 000 VND each year

- Annual revenue of the park comes from:

+ Kayak rents: 50 000 VND/ ticket - on average, 150 kayak tickets are sold each day

+ Artificial mountain climbing fee: 100 000 VND/ ticket - on average 200 turns per day

+Trampoline jumping fee: 100 000 VND/ ticket - on average 150 turns per

day

+ Gym: 50 000 VND/ hour

+ Parking fee: 5000 VND per motorbike and 20.000 VND per car It isestimated that there are 100 vehicles including 70 motorbikes and 30 cars per day onaverage

+ Camping service cost: 50000 VND/ turn - on average 20 turns per day

+ Tennis court rent: 30000 VND / turn - on average 50 turns each day

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- Salvage is estimated at 0,5 billion

- Profit tax is 20% of the profit

- In the first 3 years, 100 labors are hired for the project, and from year

4->20, 100 more laborers are recruited to operate the park

+ The unemployment rate is 50% (unemployment workers are receiving unemployment benefits)

+ Wage for each worker is 60 000 000 VND/ year

- Assume that 1 year has 360 days

2 Valuation: (For Detailed information, click here )

Table 3.2 The Project Revenue ( Unit: thousand VND)

Trampoline

jumping

Turn(Motorbike

Table 3.3 The benefits and costs of the project from both private and

social perspectives ( Unit: thousand VND)

Capital 1500000 1500000

Labor cost 12000000 6000000Profit tax 1279000 0

Table 3.4 Valuing indirect impacts (Unit: million VND)

Valued by million VND/1ha of

Hedonic pricing(increase the value ofthe land if the nature

Contingent valuation

Improve local Contingent valuation

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method (willingness toaccept compensation tolive in an environmentnear a construction site) 50

Table 3.6 Real Cost and Benefit (Unit: million VND)

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rate 0.96 0.92 0.89 0.85 0.82 0.79 0.76 0.46

PV -7117.27 -6709.34 -6324.79 4300.28 4053.81 3821.46 3602.43 1672.48 Accumul

ative -7117.27 -13826.61 -20151.41 -15851.13 -11797.32 -7975.86 -4373.42 27369.29

NPV = 27369.29 (million VND)

NPV>0

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Option 4 Astronomical Park

I Concept

The Astronomical Park has many types of facilities to meet the

recreational needs of the community Specifically :

- The center of the park is a large lake, in the center of the lake is a statue ofPresident Ho Chi Minh, a world cultural celebrity, connected by many bridges so thatpeople can visit and take photos Surrounding the lake are statues of other culturalcelebrities in the world

- The park also has an outdoor stage and surrounding seating system, where manyevents and activities take place Profits can be made through the rental of fairs andexhibitions, thereby maintaining the park's operation

Besides, there is also a galaxy square with a simulation model of planets andastronomical phenomena to help visitors have more knowledge about science It ispossible to profit through the fact that visitors can hire a tour guide for a morethorough and in-depth explanation of the history of astronomy

- The park also has a large observatory Visitors can purchase tickets to have a night out at the park and see the stars in the sky

The park also has many trees and benches as well as umbrellas for visitors to restalong the way In addition, the park also has a play area for children and exerciseequipment so that residents near the park can come and relax

Picture 3.2 Sport Park Main Facilities

II Identify Cost-benefit associated with the project Table 4.1 Identify

cost-benefit

With market Non Market With market Non Market

a place to relaxand have fun

Project revenue comes from:

- Coffee shop: on average, 200 bills per day, each bill is 50,000

Construction investment cost in the first 3 years is 1,2 billion VND/year

The annual operating cost when the project is put into operation is 1 billion

- The average salary per worker is 100 million VND/year

Assume that 1 year has 360 days

Table 4.1 Project Revenue Information

Foreign capital 35%

million per

in first 3 year 100 peoplefrom year 4 to

Unemployment

million per

2 Valuation:

Table 4.2 The benefits and costs of the project from both private and

socialperspectives ( Unit: thousand VND)

Unit: millionVND

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