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. 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 1 (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 ii Table of content iii List of tables vi List of figures viii Abbreviation ix Abstract xi Abstrak xii CHAPTER I .1 T 0 T 0 Economy of Viet Nam.2 T 0 T 0 Demand of energy in Viet Nam .3 T 0 T 0 Power development plan (2003-2020) .4 T 0 General flood control in Viet Nam.8 T 0 Significance of study .2 Approach in sustainability development of reservoir for multiple uses .3 Cost-benefit analysis (CBA) .2 Cost Benefit Analysis (CBA) of dams.1 Environmental cost-benefit .2 Social impact mitigation cost .3 Flood control costs-benefits .4 Irrigation costs and benefits. 26 T 0 T 0 MATERIALS AND METHODS .10 Soil classification and soil erosion.1 T 0 Private costs and benefits .2 T 0 Public costs and benefits.1 T 0 Primary data collection .2 T 0 Secondary data collection .6 Flood control cost estimate .1 Calculation principles for flood control cost .2 Link between damage cost and return period.3 Cost of the energy loss. 44 T 0 T 0 RESULTS AND DISCUSSION .2 T 0 T 0 Private costs benefits.2 O peration and Maintenance Costs .3 Public costs and benefits.1 T 0 Flood control costs and benefits.1 T 0 Flood control costs .2 T 0 Flood control benefits.2 Irrigation costs and benefits .4 T 0 T 0 Environmental and social costs and benefits .1 T 0 Loss of potential timber production.2 T 0 Loss of land .3 T 0 Loss of existing agricultural production .5 T 0 Loss of biodiversity .6 T 0 Loss of existing fishing income .7 T 0 Loss of existing hunting income .8 T 0 Loss of revenue of existing collection of forest product.9 T 0 Disruption of existing River transportation .2 Fisheries in Ca River .3 Potential for tourism.5 E mployment opportunities for local people.5 T 0 T 0 Cost benefit analysis of the project .2 Economic evaluation parameters. 73 T 0 T 0 iv CONCLUSIONS AND RECOMMENDATIONS.
80 T 0 T 0 SOIL MAP, SOIL EROSION POTENTAIL MAP AND LAND USE MAP. 105 T 0 T 0 CONTINGENT VALUATION FOR ENVIRONMENTAL. 109 T 0 T 0 COST- BENEFIT ANALYSIS. 134 T 0 T 0 PICTURES OF THE STUDY AREA DURING THE FIELD TRIP.
134 T 0 T 0 v LIST OF TABLES Page Table 1.1 GDP growth, GDP per capita and Population of Viet Nam from 1995 to 2003…………………………………………….2 The power generation capacities by energy sources………….1 Benefit of flood control of Klang river basin flood mitigation project ………………………………………………………….2 Key dimensions and key impacts of access to good irrigation water ………………………………………………………….1 Land use in Ban La catchment and reservoir area………….2 Soil types of Ban La catchment area………………………….3 Potential erosion in Ban La catchment area………………….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 …………………………….7 Irrigated area and discharge of Do Luong system from Ca river ………………………………………………………………… 60 Table 4. Irrigated area and discharge of pumping stations direct from Ca river in the NNAIS …………………………………… 60 Table 4.9 Irrigated area and discharge of Nam Dan system from Ca river………………………………………………………………….10 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………………………………………….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……………………………………………………….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 …………………………………….24 Cost disbursement for Ban La hydropower project ………….25 Basic data for economic assessment of Ban La hydropower project (FSL= 200m; P = 320 MW; 5 years construction time and 10% discount rate …………………………………….26 Result of cost benefit analysis of Ban La hydropower project discount rate = 10% ………………………………………….27 Results of sensitivity analysis with changes in discount rate, output and lifespan of the project 82 vii LIST OF FIGURES Page Figure 3.1 Location of the study area …………………………………… 32 Figure 3.2 Total cost and total benefits ………………………………… 42 Figure 4.1 Hydraulic network scheme …………………………………… 62 viii 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 ha 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 2 km P Square Kilometer kW Kilowatt kWh Kilowatt hour l/s Liter per second mm Millimeter m2P Square meter m3P Cubic meter 3 m /s P P Cubic meter per second MARD Ministry of Agriculture and rural Development Mm3 P Million cubic meter 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 1 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 ABSTRACT The construction and operation of Ban La hydropower project will lead to a variety of changes in the local and wider environment. Many of the impacts will be beneficial, both at the regional and national level. Project implementation will have some socioeconomic impacts on communities in two districts upstream and nine districts downstream from the dam.
Completion of Ban La project will supply water to two irrigation systems: North Nghe An Irrigation System and South Nghe An, which corner some 62,220 ha of irrigated area in Nghe An province. The construction of the project will also reduce flood peak in the downstream area and hence reducing flood damages for riverine residents in the downstream area. This study evaluates economic and environmental impacts of Ban La project on local communities: upstream of the Ban La dam; flooded area and irrigation areas downstream from the proposed dam. Private costs and benefits as well as public costs and benefit are estimated for the project in order to arrive at the total net social benefits.
Contingent Valuation Method (CVM) is used to estimate the costs and benefits associated with intangible item or non-market goods. The study found that the net present value of social benefits at 10% discount rate and 30 years project operation period is positive (BVND 533. Benefit-Cost ratio is 3.18 and Internal Rate of Return (IRR) is 11%. Sensitivity analysis is also performed to detect responsiveness of the investment to changes in discount rate, changes in output of the project as well as different scenarios of project lifespan.
Abstrak Pembinaan empangan hidro Ban La dijangka akan membawa berbagai kesan, terutamanya faedah terus dan juga sampingan kepada penduduk setempat khasnya. Kesan sosioekonomi akan dirasai di dua buah daerah (Tuong Duong dan Ky Son) dibahagian hulu empangan dan juga 9 xi Abstrak Pembinaan empangan hidro Ban La dijangka akan membawa berbagai kesan, terutamanya faedah terus dan juga sampingan kepada penduduk setempat khasnya. Kesan sosioekonomi akan dirasai di dua buah daerah (Tuong Duong dan Ky Son) dibahagian hulu empangan dan juga 9 daerah di kawasan hilir empangan. Antara faedah yang akan dinikmati ialah dalam bentuk kemudahan sistem pengairan (North Nghe An Irrigation dan South Nghe An Irrigation) yang meliputi 62,220 hektar tanah pertanian.
Kajian yang dijalankan ini adalah bertujuan untuk menilai kesan pembinaan empangan Ban La dari segi kesan sosioekonominya. Analisis pelaburan dijadikan asas penilaian ini dimana segala elemen faedah dan kos diambil kira. Faedah dan kos barangan sumber asli dan alam sekitar dinilai dengan kaedah penilaian kontinjen. Hasil kajian mendapati projek mempunyai nilai faedah sosial kini berjumlah BVND 533.
Nisbah faedah-kos pelaburan ini adalah 3.18 dan kadar pulangan dalam adalah 11%. Ini bermaksud projek tersebut adalah baik dan berupaya memberi sumbangan positif kepada sosioekonomi penduduk tempatan. xii CHAPTER I INTRODUCTION 1. Economy of Viet Nam Viet Nam’s modern economy evolves from the burden of military action and political upheavals.
After partition in 1954, North Viet Nam and South Viet Nam each developed their own economic structure separately, reflecting different economic systems with different resources and different trading patterns. The North operated under a highly centralized and planned economy, whereas the South maintained a free- market economy. With the reunification of Viet Nam in 1976, North Viet Nam’s centrally planned and controlled economy was introduced and adopted in the south of Viet Nam. Since 1986, the “innovative” and “opened-door” policy practiced by the Vietnamese Government has attracted foreign investors to come to do businesses and promote both the state and private economic elements, which spur the economic development of Viet Nam.
It has changed to the market- oriented economy since then. Having a stable political regime, the Gross Domestic Product (GDP) growth rate of Viet Nam from 1991 to 2002 has reached an average figure of 7. GDP per capita of Viet Nam was USD 490 in 2003.