1.1 Motivation and Objective
A well-developed transportation infrastructure is vital to a country’s economic development. Therefore, transportation has always been an important priority in national development plan. As for the case of Taiwan, it can be seen that from the early “Ten Major Construction Projects” in the 1970s to the most recent “Challenge 2008 National Development Plan”, improving the transportation infrastructure was made one of Taiwanese government's major tasks.
Moreover before the government undertakes transportation programs it is essential to undertake the feasibility study. This is mainly because the transportation programs naturally are predominantly funded by central governments, the parliaments often explicitly call for feasible studies to seek justifications for spending taxpayer funds. The fundamental principle to conduct the feasible study is to compute potential positive and negative impacts accurately. In order to reach a conclusion as to the desirability of a project all aspects of the project, economic and non-economic, must be expressed in terms of their equivalent money values. A project's proponents will anticipate the overall positive effects for the validation to carry out the project.
Despite the fine process of evaluating a project, there have been numerous disputes resulting from project implementation. The controversies primarily could be attributed to two reasons. The first explanation is insufficient framework in project assessment. It is well known that cost-benefit analysis (CBA) is the most frequently used technique in project evaluation. In fact CBA has come to dominate other methods of evaluations in the project appraisal CBA estimates and totals up the equivalent money value of the benefits and costs to the community of projects to establish whether they are worthwhile. The accuracy of the outcome of a CBA hinges on how precisely costs and benefits have been estimated. The formal CBA approach generally focuses on computing the impact of economic variables and is lacking adequate tools to handle non-economic variables. In particular for an environment-sensitive transportation project the CBA approach has difficulty calculating the effects from the environmental aspects. Neglecting environmental dimension in CBA analysis may be argued to be a substantial risk in planning, because inaccuracies are likely to lead to inefficient decisions.
Given the problems in the CBA assessment, there was an attempt to develop the
“Environmental Impact Assessment (EIA)” to supplement the CBA. The EIA principally includes environmental features in the evaluation process. However, the
widely-adopted exercise which involves the “EIA and the traditional CBA in a sequential way may be flawed with a failure to calculate the resultant economic and environmental impacts in a same setting and at the same time.
In addition great efforts have been devoted to constructing the Contingent Valuation Method (CVM). CVM could take environmental factors into account and by far is the most frequently applied methodology. Actually CVM has emerged as an alternative instrument in project assessment. Nonetheless, the CVM mainly deals only with the environmental impacts, paying not much attention to the economic impacts and still falling short of expectations.
In summary the current evaluation methodologies have been conducted with restrictions. There is a need to develop an integrated cost-benefit model for an environment-sensitive transportation project. Specifically when the subject of sustainable development has become an increasing concern around the globe, it is imperative to build up a comprehensive method in project appraisal.
The second reason for controversies in project enforcement is inappropriate classification of interest groups. This is predominantly prevalent in the environment-sensitive transportation projects. In recent years protecting the environment and natural resources has become a central concern around the world.
Environmental protection is extremely important for sustainable economic growth and social progress. The elements of environmental protection objective involve reducing the direct and indirect impacts of transport facilities and their use on the environment of both users and non-users. The environment impacts of concern include noise, atmospheric pollution of differing kinds, vibration, and other pollutants. While some of these can be quantified and monetized, others are much more difficult to define and analyze.
Given the difficulty in sorting and quantifying pollution factors the interest of specific groups which are influenced by pollution will inevitably be overlooked. It will lead to certain interest groups have not been identified in the project evaluation process. This problem could be further amplified by the fact that the current procedure could not handle environmental factors properly. Consequently it is necessary to classify interest groups appropriately in project appraisal
Based on the above descriptions, this study aims to fill the gap of the framework of project appraisal. It will explore the often neglected but important environmental impacts of project evaluation. Accordingly the purposes of this study could be illustrated as follows:
(1) Developing an advanced methodology of project evaluation:
Given current limitations of project evaluation this study seeks to construct a complete technique of project evaluation. It first emphasizes on identifying the scope of environmental goods and the interest groups. This will be followed by incorporating existing CBA and CVM. We will employ CVM to appraise the value of environmental goods. It should help the transportation planners to deal with widening scope of environmental subjects more confidently in the future.
(2) Establishing the redistribution mechanism of economic benefits accruing from transportation projects
It is common that more interest groups are affected by the transportation projects due to the widespread effects of environmental factors. There is a perceived need to develop methods and procedures that can be used by transportation planners to evaluate the distributional impacts of projects. This study is set to construct redistribution mechanism of economic benefits accruing from transportation projects.
This should enable us to ascertain socio-economic factors that affecting evaluation of environmental goods. As a result it can alleviate the dissatisfaction from the affected interest groups and to facilitate the project enforcement.
Accordingly, the contribution of the study is twofold. Firstly, this study has developed an efficient process in evaluating an environment-sensitive project. As we know environmental impacts are qualitative in nature and are hardly and difficult to be converted into monetary terms. By monetizing the environmental impacts, the study shows that it is feasible to integrate the CBA with the environmental factors on an equal basis.
The second contribution of the study comes from the empirical case. This study employed the Pinglin Interchange for the case study. The empirical results show that an integrated CBA may produce an entirely different conclusion from the one resulting from the common traditional environmental assessments. This inspiring result may be served as an important milestone for social planners in evaluating the environmental-sensitive projects in the future.
1.2 Research Scope
As described earlier this study sets to improve the current project evaluation methodology and derive the redistribution system accordingly. Therefore the scope of the research consists of two parts. The first part is to go a step further than the previous research by developing a step-by-step process which integrates the CBA with the CVM to assess the overall effects (both the environmental and economic
impacts) for a transportation project.
The second part of the research scope is to apply a case for the illustration. The empirical base of the study draws on the case of the Pinglin Interchange in Taiwan.
Pinglin, as a tiny rural town in northern Taiwan with only about six thousand residents, is famous for its green tea and rapidly-growing tourism business. The debate was originated from the contraction of No. 5 highway. Ever since the plan was announced for the No. 5 Freeway, which will connect Taipei to Yilan through one of the world's longest tunnels, Pinglin residents have been agitating for a full-fledged interchange at their town. The predominant motivation for them was economic consideration. They alleged that if there is no full function interchange in Pinglin, most of the travelers will not stop in Pinglin and Pinglin may lose its tourists to Yilan.
On the other hand the official evaluation reports did not support the full function interchange for the environmental reason. This is because the interchange lies within the catchments area of the Feitsui Reservoir, which supplies drinking water to near five million inhabitants within the Taipei metropolitan area. However since the government reports did not identified and monetized environment factors appropriately, the impacts of pertinent groups have not revealed consequently. The credibility of the reports has been questioned to a great extent.
For the purpose of this study we will develop an integrated cost-benefit method.
Following the methodology the subject of Pinglin interchange will be selected as an instructive example. The survey was conducted over the period from April to October in 2004 and in the end 466 reliably questionnaires were obtained. Admittedly, the case of the Pinglin Interchange is relatively small and simple, but the process presented in the study may serve as a reference point for a bigger and more complex case.
In order to resolve the problems occurred in the governmental reports in the following work we will classify the sources of pollution into three pollutants: air pollution, water pollution and noise. The people are affected by the pollutants can be categorizes into two groups accordingly. The first group is Pinglin residents and passengers who are mainly affected by air and noise pollutants. Taipei metropolitan residents who rely on Feitsui Reservoir for drinking water can be regarded as second group, since Pinglin interchange may contaminate Feitsui Reservoir pollution.
According to the above descriptions this study is organized as follows. Chapter 1 is the introduction, which describes the motivation, objective and scope of this dissertation. Chapter 2 will first reviews the evolution of methods in evaluating environment-sensitive projects. This will be followed by the overview of the CVM approach. Chapter 3 illustrates the methodology of the survey. Chapter 4 provides an
overview of the Pinglin case and the survey results are discussed subsequently. In chapter 5 we further extend the case study by examining the impacts of imposing user on pollution reduction. The conclusions and the directions for future research are presented in the finial chapter.
In summary the structure of this dissertation is shown in Figure 1.1.
Figure 1.1 Structure of the Dissertation