Economics - Cost Benefit Analysis - Three Gorges Dam

9
HE311 The Three Gorges Dam project, China By: Group 2 Alan Dai Sheng Jensen Yap Lee Liang Tian Lee Yee Jia Jamie Ong Soo Yue Wong Li Ting

description

Completed as a part of the presentation requirement for course HE311 - Cost Benefit Analysis.

Transcript of Economics - Cost Benefit Analysis - Three Gorges Dam

HE311 The Three Gorges Dam project, China

HE311The Three Gorges Dam project, ChinaBy: Group 2

Alan Dai ShengJensen YapLee Liang TianLee Yee Jia JamieOng Soo YueWong Li TingIntroductionThe worlds largest damAbout 2,355m long and has a maximum height of 185mBuilt near the Three Gorges which in the middle course of Yangtze River where water traverse from the western Sichuan province into Eastern Hubei

ObjectiveTo control flood

CostsProject cost: US$ 24 billionDuring construction large areas of the Qutang, Wu and Xilang gorges, some 600 km upstream of the dam were totally submerged, and the rising water flooded some 500 cities, towns and villages along the riverRelocation of 1.6- 1.9 million of people1200 sites of historical and archaeological importance vanished. For example, Baheliang (possesses 165 pieces of inscriptions dating back to the Tang Dynasty) is submerged, Zhang Fei Temple at Yungang is relocated

BenefitsFlood controlEmployment of 60,000 workersIncrease shipping capacity for inland trading- greater development and economic progressProvision of drinking water to Shanghais 13 million inhabitantsHydroelectricity- reduced dependency on coal (about 1.1- 1.2 billion tons of coals saved annually)Irrigation- increased total crop yield and improved farmers livelihoods

ExternalitiesNegativesWater pollution- water pollutant concentrated at the dam rather then being washed downstream and out to seaWildlife destruction- stagnation of water affects life pattern of the animals. For example, Siberian Crane and BaijiLoss of great sceneriesPositivesCleaner energy- less air pollutionNew skills acquired during employment for constructionMultiplier effect of the capital investmentIncreased tax revenue for local government Reduced wage disparity between rural farmers and urban workers

Discussion Questions1. The Three Gorges Dam brings economic development, controls flooding and provides irrigation to crops and farming to much of rural China. So why is there so much opposition to this seemingly beneficial projects?The Chinese government adopted this idea in 1954. Vice Minister of Electric Power Li Rui initially argued that the dam should be multipurpose, that smaller dams should be built first until China could afford such a costly project, and that construction should proceed in stages to allow time to solve technical problems, according to Chinese scholars Kenneth Lieberthal and Michel Oksenberg.Later, Li Rui concluded that the dam should not be built at all since it would be too costly, flood many cities and fertile farmland, subject the middle and lower reaches of the river to catastrophic flooding during construction, and would not contribute much to shipping. Sichuan province officials also objected to the construction since Sichuan, located upstream, would shoulder most of the costs while downstream Hubei province would receive most of the benefits.Source: http://www.ibiblio.org/chinesehistory/contents/07spe/specrep01.html#History 82. How can the Chinese government internalize the external social cost?Preservation of the historical and archaeological structures (an underwater museum has been built)Artificial reproduction schemes for endangered animalsProper management of the quality of water in the dam reservoir