Estimation of net benefit from the proposed ban la hydropower project in nghe an province vietnam

ESTIMATION OF NET BENEFIT FROM THE PROPOSED BAN LA HYDROPOWER PROJECT IN NGHE AN PROVINCE, VIET NAM NGUYEN THI HOANG HOA A thesis submitted in fulfillment of the requirements for the degree of Master of Environmental Management in Development planning Faculty of Social Sciences UNIVERSITI MALAYSIA SARAWAK 2005 ACKNOWLEDGEMENTS Firstly, I would like to thank DANIDA funded WaterSPS Subcomponent 1.3 support to Capacity Building at the Hanoi Water resources University (HWRU), Vietnam for the sponsorship of my study I wish to express my appreciation and gratitude to those who had helped and supported me in the project that leads to this dissertation I wish to thank my major supervisor, Assoc Prof Dr Gabriel Tonga Noweg, for his guidance throughout my study at Unimas From him and his guidance, I have gained much knowledge and experiences, which I will pass on in my own future I also wish to thank all my lecturers in Unimas for their assistance and advice I would also like to thank Mr Robert Malong for his help during my Master Course I am also grateful to my co-supervisor Dr Ngo Thi Thanh Van (HWRU) for her kind and valuable assistance during my data collection in Vietnam I am indebted to all the officers in the DANIDA and HWRU Board, Power Engineering Consulting Company No (PECC1), districts officials of Nghe An province, Institute of Water resources planning (IWRP) and Aquatic Product Research Institute, Do Luong weir manager, Nam Dan sluice manager, Department of Agriculture and rural development of Nghe An province, National Central Meteo-Hydrology Forecast (NCMHF), and local people in the ten districts of Nghe An province Thank you for your friendly and warm assistance during my field trip My special thanks go to my husband and my children, who love me enough to let me go and study abroad Thanks for their endless support and encouragement during the coursework and completion of this dissertation ii TABLE OF CONTENT Acknowledgment Table of content List of tables List of figures Abbreviation Abstract Abstrak ii iii vi viii ix xi xii CHAPTER I INTRODUCTION T T T T 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 T T T T T T T T T T T T T T T Economy of Viet Nam Demand of energy in Viet Nam Power development plan (2003-2020) General flood control in Viet Nam Irrigation Problem statement Objective Significance of study T T T T T T T T T CHAPTER II LITERATURE REVIEW T T T T 2.1 Introduction 2.2 Approach in sustainability development of reservoir for multiple uses 2.3 Cost-benefit analysis (CBA) 11 T T T T T T 2.3.1 Introduction 11 2.3.2 Cost Benefit Analysis (CBA) of dams 12 T T T T 2.3.2.1 Environmental cost-benefit 15 2.3.2.2 Social impact mitigation cost 17 2.3.2.3 Flood control costs-benefits 21 2.3.2.4 Irrigation costs and benefits 24 T T T T T T T T T T T T CHAPTER III 26 MATERIALS AND METHODS 26 T T T T 3.1 3.2 T T Introduction 26 Study area 27 3.2.1 Location 27 T T T T 3.2.2 3.2.3 3.2.4 3.2.5 3.2.6 3.2.7 3.2.8 3.2.9 3.2.10 3.2.11 3.2.12 3.2.13 Topography 29 G eology 29 Climate 30 Rainfall 30 Temperature 30 Humidity 31 River flow 31 Land use 31 Soil classification and soil erosion 32 People 33 Irrigation 34 Flood occurance 34 T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T T iii 3.3 Conceptual frameworks 35 T T 3.3.1 3.3.2 Private costs and benefits 37 Public costs and benefits 38 T T T 3.4 T Data collection 39 T T 3.4.1 3.4.2 Primary data collection 39 Secondary data collection 39 T T T T 3.5 Contingent valuation 40 3.6 Flood control cost estimate 40 T T T T 3.6.1 Calculation principles for flood control cost 41 3.6.2 Link between damage cost and return period 42 3.6.3 Cost of the energy loss 42 T T T T T 3.7 T Data analysis 43 T T CHAPTER IV 44 RESULTS AND DISCUSSION 44 T T T T 4.1 4.2 Introduction 44 Private costs benefits 44 T T T T T T T T 4.2.1 C onstruction costs 44 4.2.2 O peration and Maintenance Costs 45 4.2.3 Resettlement cost 45 4.2.4 Electric benefit 45 T T T T T T T T T T T T T T 4.3 Public costs and benefits 46 T T 4.3.1 Flood control costs and benefits 46 T T 4.3.1.1 4.3.1.2 T T Flood control costs 47 Flood control benefits 48 T T 4.3.2 Irrigation costs and benefits 52 T T 4.3.2.1 Irrigation benefits 52 4.3.2.2 Irrigation costs 58 Environmental and social costs and benefits 59 T T T 4.4 T T T T T 4.4.1 Environmental cost 59 T T T T 4.4.1.1 4.4.1.2 4.4.1.3 4.4.1.4 4.4.1.5 4.4.1.6 4.4.1.7 4.4.1.8 4.4.1.9 T T T T T T T T T 4.4.2 T Loss of potential timber production 59 Loss of land 60 Loss of existing agricultural production 61 Carbon sequestration 61 Loss of biodiversity 62 Loss of existing fishing income 62 Loss of existing hunting income 62 Loss of revenue of existing collection of forest product 62 Disruption of existing River transportation 62 T T T T T T T T T Environmental benefits 63 T T T 4.4.2.1 Merchantable timber 63 4.4.2.2 Fisheries in Ca River 64 4.4.2.3 Potential for tourism 64 4.4.2.4 Transportation 65 4.4.2.5 E mployment opportunities for local people 66 4.4.2.6 Road access 67 Cost benefit analysis of the project 67 T 4.5 T T T T T T T T T T T T T T T T T T T T T T T T T 4.5.2 Economic evaluation parameters 69 4.5.3 Sensitivity analysis 70 T T T T CHAPTER V 73 T T iv CONCLUSIONS AND RECOMMENDATIONS 73 T T 5.1 Conclusion 73 5.2 Recommendation 75 T T T T T T REFERENCES 75 T T APPENDIX A 80 SOIL MAP, SOIL EROSION POTENTAIL MAP AND LAND USE MAP 80 T T T T APPENDIX B 84 HYDROLOGICAL DATA 84 T T T T APPENDIX C 98 SURVEY QUESTIONNAIRES 98 T T T T APPENDIX D 105 CONTINGENT VALUATION FOR ENVIRONMENTAL 105 PARAMETERS 105 T T T T T T APPENDIX E 109 COST- BENEFIT ANALYSIS 109 T T T T APPENDIX F 134 PICTURES OF THE STUDY AREA DURING THE FIELD TRIP 134 T T T T v LIST OF TABLES Page Table 1.1 GDP growth, GDP per capita and Population of Viet Nam from 1995 to 2003…………………………………………….…… Table 1.2 The power generation capacities by energy sources………… Table 2.1 Benefit of flood control of Klang river basin flood mitigation project ………………………………………………………….…… Table 2.2 26 Key dimensions and key impacts of access to good irrigation water ………………………………………………………….…… 29 Table 3.1 Land use in Ban La catchment and reservoir area………… 36 Table 3.2 Soil types of Ban La catchment area………………………… 37 Table 3.3 Potential erosion in Ban La catchment area………………… 37 Table 3.4 Data need and data collection method………………………… 45 Table 4.1 Construction cost of Ban La dam……………………………… 51 Table 4.2 Initial investment costs, annual operation and maintenance cost in percentage and value …………………………………… 51 Table 4.3 Basic data of Ban La hydropower project …………………… 54 Table 4.4 Damage cost of historical flood events ………………………… 57 Table 4.5 Flood damage Vs return period ………………………………… 57 Table 4.6 Flood routing by Ban La reservoir …………………………… 59 Table 4.7 Irrigated area and discharge of Do Luong system from Ca river ………………………………………………………………… Table 4.8 Irrigated area and discharge of pumping stations direct from Ca river in the NNAIS …………………………………… Table 4.9 60 Irrigated area and discharge of Nam Dan system from Ca river………………………………………………………………… Table 4.10 60 61 Irrigated area and discharge of pumping stations direct from Ca river in the SNAIS……………………………………… 61 Table 4.11 Irrigated failure in the future without Ban La project……… 63 Table 4.12 Irrigated failure in the future after completed Ban La project ……………………………………………………………… 64 Table 4.13 Effective irrigated area………………………………………… 64 Table 4.14 Annual benefit from irrigation in the area 66 vi LIST OF TABLES (CONTINUE) Table 4.15 Forested area permanently flooded after creation ban La reservoir……………………………………………………… 67 Table 4.16 Estimation of timber loss in the reservoir area 68 Table 4.17 Estimation of land loss by Ban La project (current value)………………………………………………………………… 69 Table 4.18 Estimation of annual agricultural production loss ………… 69 Table 4.19 Average standing volume (or stock) of the forest …………… 72 Table 4.20 Estimation of timber can be harvest in the reservoir area 72 Table 4.21 Merchantable of timber in the reservoir area ……………… 72 Table 4.22 The water level along Ca river before and after construction Ban La project …………………………………………………… 75 Table 4.23 Construction period criteria …………………………………… 77 Table 4.24 Cost disbursement for Ban La hydropower project ………… 78 Table 4.25 Basic data for economic assessment of Ban La hydropower project (FSL= 200m; P = 320 MW; years construction time and 10% discount rate …………………………………… Table 4.26 Result of cost benefit analysis of Ban La hydropower project discount rate = 10% ………………………………………… Table 4.27 79 80 Results of sensitivity analysis with changes in discount rate, output and lifespan of the project 82 vii LIST OF FIGURES Figure 3.1 Figure 3.2 Figure 4.1 Location of the study area …………………………………… Total cost and total benefits ………………………………… Hydraulic network scheme …………………………………… viii Page 32 42 62 LIST OF ABBREVIATIONS % Per cent ADB Asian Development Bank APRI Aquatic Product Research Institute B/C Benefit/ cost BVND Billion Vietnamese Dong CBA Cost Benefit Analysis CVM Contingent Valuation Method DARD Department of Agriculture and Rural Development EIA Environmental Impact Assessment FIPI Forest Inventory and Planning Institute FSL Full Supply Level GDP Gross Domestic Product GWh Gigawatt hour Hectare HPM Hedonic Price Method IAP Institute of Agricultural Planning IE Institute of Energy IG Institute of Geography IRR Internal Rate of Return IWRP Institute of Water Resources Planning kg Kilogram km Kilometer km Square Kilometer kW Kilowatt kWh Kilowatt hour l/s Liter per second mm Millimeter m2 Square meter m3 Cubic meter P P P m /s Cubic meter per second MARD Ministry of Agriculture and rural Development Mm3 Million cubic meter P P P ix LIST OF ABBREVIATIONS (CONTINUE) MVND Million Vietnamese Dong No Number NNAIS North Nghe An Irrigation System NB National Bank NPV Net Present Value O&M Operation and maintenance P Probability PECC1 Power Engineering Consulting Company Q Discharge SNAIS South Nghe An Irrigation System TCM Travel Cost Method TWL Tail Water Level USC US Cent USD US Dollar VND Vietnamese Dong WB World Bank WE Wood Equivalent WTA Willing To Accept WTP Willing To Pay Yr Year x 124 125 126 127 128 129 130 131 132 133 APPENDIX F PICTURES OF THE STUDY AREA DURING THE FIELD TRIP 134 135 136 137 138