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Tutorial 7

The document discusses a proposed development strategy for Cheung Chau Island by the HK government, featuring three infrastructure projects with varying Benefit-Cost Ratios (BCR). It outlines the main benefits, stakeholders, and community preferences for each project, as well as considerations for a proposed extension of the Tseung Kwan O Line by MTR Corporation. The document emphasizes the importance of economic feasibility analysis and the implementation of willingness to pay/willingness to accept (WTP/WTA) in decision-making processes.

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8 views3 pages

Tutorial 7

The document discusses a proposed development strategy for Cheung Chau Island by the HK government, featuring three infrastructure projects with varying Benefit-Cost Ratios (BCR). It outlines the main benefits, stakeholders, and community preferences for each project, as well as considerations for a proposed extension of the Tseung Kwan O Line by MTR Corporation. The document emphasizes the importance of economic feasibility analysis and the implementation of willingness to pay/willingness to accept (WTP/WTA) in decision-making processes.

Uploaded by

wiltonliu.lpc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Tutorial 7

Cost-Benefit Analysis

1
Discussion 1
The HK government is proposing a developing strategy of Cheung Chau Island (長洲島) in 2019.
Three infrastructure facilities are proposed with different estimated Benefit-Cost Ratios (BCR). The
basic information for these projects are illustrated as follows.
Light Rail & Cable Car Eco-Park Shopping Mall &
Resort
Investment budget HK$ 1,500 million HK$ 220 million HK$ 780 million
Expected usage
50 years 80 years 25 years
period
BCR 2.1 1.6 2.3
Provide recreational Provide economic
Provide easy and
space without massive activities and
affordable access for
Main benefits ecological and development
both local residents and
environmental opportunities in Cheung
tourists.
disturbance. Chau Island.
Main funder HK Government Islands District Private Developer

Q1 Identify TWO main benefits (intangible or tangible) for each project, and identify the main stakeholders
for each benefit.
Q2 After conducting a rough interview, the majority of the local residents prefer “Eco-Park’, foreign tourists
prefer “Shopping Mall & Resort”, while HK residents prefer “Light Rail & Cable Car”.
Explain how these values can be incorporated in the decision-making process.

2
Discussion 2
Recently, Hong Kong MTR Corporation Limited is considering to extend today’s Tseung Kwan O
Line (from Po Lam station) with three new stations, which located near the Hong Kong University
of Science and Technology, Nam Wai (南圍) and Pak Sha Wan (白沙灣). MTR Corp. claimed this
development would benefit the local community by providing working opportunities, with significant
economic improvement mainly in tourism and service sectors. As part of the consulting team
appointed by MTR Corp., you are responsible to conduct economic feasibility analysis, and to
advise MTR Corp. and HK government to proceed the development or not with justifications.

Q1 Identify and explain how WTP/WTA can be implemented for this particular project.
(Hint: damages to the ecosystems, benefits to local real estate pricing, compare with other
transport modes, etc.)
Q2 Who should be included in WTP/WTA, and why?
The local residents, the wetland tourists or the general public.
Q3 A similar study was conducted in Sweden, explain why you should use (or not use)
the WTP/WTA figures using “benefit transfer method”.

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