Water Resources Planning Branch, WRA, MOEAWater Resources Planning Branch, WRA, MOEA

Background

The economic benefit analysis of domestic hydraulics engineering projects at the stage of feasibility assessment and planning is often being questioned. The water resources agency has conducted several studies on the economic benefit assessment of hydraulics engineering projects in the past. This projected is being carried out in order to enable colleagues in the implementation of hydraulics engineering projects to measure the economic benefits.

Main working items

The domestic and foreign economic benefit analysis methods will be integrated in this project. In particular, an analysis process for economic benefit, which is applicable to the water resources agency, will being developed in this plan which will follow the whole analysis process invented by USACE (United States army corps of engineers).

Work completed

1. develop key business projects applicable to hydraulics engineering

   According to the practice of USACE, the economic benefit evaluation is suggested to be conservative, and the indistinct benefit is not being calculated. The benefit calculation of domestic flood control projects can be divided into two parts: the benefit of reducing flood loss and other benefits.

2. Comparison of economic benefit analysis methods between the domestic and the foreign hydraulics engineering projects

   In terms of national economic development benefits (NED), there is little difference in concept between Taiwan and the United States. However, the basic concepts of estimation of flood losses are roughly the same between two countries. In this plan, it is suggested to refer to the damage estimation method proposed by Mays, 2010.

3. Project Analysis of Yuanshantz Flood Diversion Tunnel

   1. define the scope of the project

      The reduction of flood damage on both sides of Keelung river due to the flood diversion of Yuanshantz flood diversion tunnel is mainly evaluated in the project, while the benefits of recreation and ecological services are not included.

   2. Basic Assumption and Parameter setting

      1. Base year: 2018 (discount all values to 2018).
      2. Economic analysis period: 3 years before construction and 50 years after operation
      3. Analysis period: 2018 to 2070
      4. Social discount rate: the real social discount rate, with 3% as the standard.

   3. Calculate the present value of costs and benefits

      Return period	Exceedance probability	Loss before (million TWD)	Loss after (million TWD)
      200	0.005	15707.88	5941.57
      100	0.01	13840.51	4467.93
      50	0.02	11382.32	2583.30
      20	0.05	3562.40	757.34
      10	0.1	0.00	0.00
      Annual expected loss (million TWD per year)		591.76	160.03
      Annual benefits (million TWD per year)			431.72

   4. Evaluate the feasibility of the project according to decision criteria

      The total cost of the project is 8 billion NTD in 2018. The total benefit of the project is about 10.47 billion NTD. The net benefit present value is about 2.42 billion NTD, and the profit/cost ratio is 1.30 NTD which indicates the project is worth being developed.