GROUP ASSIGNMENT topic 6 cost benefit analysis for a national park

Identify Cost-benefit associated with the project Table 1.1.. Cost-benefit analysis With market price Non-market price With market price Non-market price Reduce the cost of air conditi

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)

2 Lê Lưu Thùy Linh

11184481

Subject Cost Benefit Analysis

Professor TS Hoàng Thu Hà

✦ HÀ NỘI - 2021 ✦

A NATIONAL PARK Table of Content

II Identify Cost-benefit associated with the project 3

II Identify Cost-benefit associated with the project 10

II Identify Cost-benefit associated with the project 17

II Identify Cost-benefit associated with the project 23

Option 1 Eco green park

I Concept:

From the entrance of the park, there will be a green path surrounded bytrees and grass with statues made from recycled waste, serving visitors to

check-in and have a picnic space In addition, visitors can fully enjoy theatmosphere 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 sununder the trees and enjoy the atmosphere Moreover, public wastebasketsand propaganda slogans about preserving the environment areindispensable

Picture 1.2 Eco Green Park - preserving nature

Going straight to the center will be a bridge spanning a canal with twobanks of flowers surrounding a greenhouse with a tropical landscapeinside and a small lake occupying an empty space at the end of thegreenhouse, and the larger space inside is a place to hold events andexhibitions

Picture 1.3 Eco Green Park - Flower garden

Furthermore, to meet the entertainment needs of visitors as well as toincrease profits, the park can sell vending machines so that guests can buywater or fast food.

II Identify Cost-benefit associated with the project

Table 1.1 Cost-benefit analysis

With market

price

Non-market price

With market price

Non-market price

Reduce the cost

of air condition

Traffic noise production decrease

Cost of acquiringthe property

Temporary affectthe living

environment of surrounding people (dust, noise pollution)Create income

from tourism

Create beautiful scene

Design and construction cost

Operation and maintenance cost

The opportunity costs associated with the loss of property tax income that the community would have received if the property had been developed for other

purposesReduce the cost

of healthcare

expenditure

Landscaping costs

III Valuing impacts

Table 1.2 Benefit(annual revenue)

7

Children’s playground (sculpture painting,

Table 1.3 Investment capital

No Category

Cost (million

1 Construction cost 2,500

green-house construction cost is 300million VND including transparent canopy imported fee is 150 million dong (including 10% of tariff)

Table 1.4.1 Investment capital (labor cost)

Wage per person per month

(million VND)

Wage per person per year (million VND)

Wage per year (million VND)

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

Net profit (private pointview) 7217.55

Net profit (social pointview) 8323.95

Table 1.6 The benefit and cost of the non market price

Annual (million VND)

One time (million VND)

Traffic noise

production decrease

Cost of avoidance (avoid the cost of soundproof wall

Beautiful scene

Hedonic pricing (increase the value ofthe land if the nature

Enhance the air Cost of avoidance 2

quality (avoid air purifier)

Recreational activity

(educational and

social benefit)

Contingent valuationmethod (WTP

survey) - how much are people willing to pay for the public recreational service 0,4

Annual (million VND)

One time (million VND)

Temporary affect the

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

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

Option 2 Creative Park

I Concept:

A creative park where artworks are exhibited.

Citizens are probably familiar with the common type of parks that arespacious and filled with trees as well as flowers This common design iswidely popular since it serves the surrounding habitants’ need forexercising and fresh air which are the top priorities of visitors according to

a study on urban public parks of Leed university However, suchinfrastructures are becoming a norm of every metropolis, and citizens ofthe modern age are subtly demanding a form of entertainment andrelaxation of a higher level In the meantime, never before witnessed amore impactful movement of artistic creativity in the community For thatreason, The creative park will be a perfect solution to the matter as itprovides a public space for artists and citizens to enjoys the creative works.Since there is already a tobacco factory, some minor adjustments to theexisting facility are enough This will save a great deal of public finance as

no large-scale construction is needed

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

distinctively in a very modern way under the cooperation of many artistsand architects The main theme will be the city of the future which focuses

on the special design of included facilities and the exhibition of artworkwithin 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 anexhibition building 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

- Cafe: The cafe is installed in the same building as the exhibition sovisitors 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

price

Non-market price

With market price

Non-market price

contentment of surrounding inhabitants

- A great motivation to artistic activities

of the community

- Construction cost

- Maintenance cost

- Management and operation cost

- Negative impact on the surroundings during the construction (Temporary air pollution)

III Valuing impacts

Project revenue comes from:

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

- Cinema: on average, 200 tickets are sold per day, the fixed price ofeach ticket is 100,000 VND

- Parking area: 150 vehicles per day on average, of which cars accountfor 40% Tickets for motorbikes and cars are 5,000 VND and 50,000VND respectively

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

Construction investment cost in the first 3 years is 500 million VND/yearThe annual operating cost when the project is put into operation is 1 billionVND/year

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

- The unemployment rate is 20% and all unemployed people thinktheir 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

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

pointview Social point viewBene

fit

Total (per year) 14742 9465,282

Total (per year) 14120,082 12250

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 timePhysical and

Beautiful view Hedonic pricing method

(Increasing value of the surrounding lands)

650

Fresh air Cost of avoidance (Increasing air

quality to the surroundings due

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

385

Cost Method Valued by million

VND/1ha of creative park

Annual OnetimeTemporary air

pollution

Contingent valuation method (willingness to accept

compensation to live in an environment near a

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 isexpected to enhance citizens' physical as well as mental health, especiallyfor children This park is also famous for being the ideal place to hold teambuilding

The main facilities of this park include:

- Outdoor space:

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

school-+ 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 theredevelopment of the former tobacco factory, and offers a world classdestination for all interests Sports Park will provide high-quality facilities,not only for major events but also for daily enjoyment by the community.With a wide variety of sports venues, open spaces, park facilities, retail anddining outlets, it is set to be an urban oasis to meet the diverse needs ofthe public, and professional and amateur athletes

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

Constructioncost

Temporary airpollution

Maintenancecost

Temporary noisepollution

- Income

from kayak

rental

Green atmosphere,beautiful scene

- Annual revenue of the park comes from:

+ Kayak rents: 50 000 VND/ ticket - on average, 150 kayak tickets aresold 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 turnsper 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 30cars per day on average

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

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

- 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 year4->20, 100 more laborers are recruited to operate the park

+ The unemployment rate is 50% (unemployment workers arereceiving 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)

Price (thousand VND)

Amount (thousand VND) 1

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

perspectives ( Unit: thousand VND)

Capital 1500000 1500000

Year 4->20

Labor cost 12000000 6000000Profit tax 1279000 0

Annual One time

Temporary air

pollution

Contingent valuation method (willingness to accept compensation to live in an environment near a construction site) 100

Temporary

noise

pollution

Contingent valuation method (willingness to accept compensation to live in an environment near a construction site) 50

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

Option 4 Astronomical Park

- The park also has an outdoor stage and surrounding seating system,where many events and activities take place Profits can be made throughthe rental of fairs and exhibitions, thereby maintaining the park'soperation

Besides, there is also a galaxy square with a simulation model of planetsand astronomical phenomena to help visitors have more knowledge aboutscience It is possible to profit through the fact that visitors can hire a tourguide for a more thorough and in-depth explanation of the history ofastronomy

- The park also has a large observatory Visitors can purchase tickets tohave 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 rest along the way In addition, the park also has a play area for childrenand exercise equipment so that residents near the park can come andrelax

Picture 3.2 Sport Park Main Facilities

II Identify Cost-benefit associated with the project

Table 4.1 Identify cost-benefit

With market

price

Non Market price

With market price

Non Market price

Income from

event space

rental cost

Improve the local people health

Construction cost

Temporary air pollution

Income from the

sale of picnic

tickets at the

observatory

Help the neighbors have

a place to relax and have fun

Maintenance cost

Temporary noisepollution

Income from the

tour guide

Help visitors have more knowledge about astronomy

Management costs

More people visit

=> more waste

=>

environmental impact

Income from

space rental

Labor costs

Project revenue comes from:

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

- Souvenir shop: on average, 50 bills per day, each bill is 30,000VND

- Observatory: on average, 200 tickets are sold per day, the fixedprice of each ticket is 80,000 VND

- Event ground, on average, 3 big events per year, 10,000,000VND per event

- Parking area: 200 vehicles per day on average, of which carsaccount for 40% Tickets for motorbikes and cars are 5,000VND and 20,000 VND respectively

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

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 billionVND/year

In the first 3 years of construction, the project hires 100 workers and fromthe 4th year onwards hires another 40 people

- The unemployment rate is 20% and all unemployed people thinktheir 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 4.1 Project Revenue Information

Foreign capital 35%

Coffee shop/ per

millionVND per bill

Souvenir shop/

millionVND per bill

Event ground 3 events 10

millionVND

perevent

Observatory/

millionVND

perticket

Parking area/

per day

millionVND

perticket

60% motorbikes 0,005

millionVND

perticket

peryear

Operating cost

from year 4 to

millionVND

peryear

peryearAverage salary

millionVND

peryear

2 Valuation:

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

perspectives ( Unit: thousand VND)

Unit: millionVND

view Benefit Year