Cost-Benefit Analysis for Abbot Point Expansion Project - Case Study Example

Executive summary This is a BCA report for the Abbot Point Expansion Project. The Abbot Point expansion project, aims at maximization of coal export and facilitate the continued economic development of Queensland. The major stakeholder of this project is the Ports Corporation of Queensland, which is Government Owned Corporation, and Adani and GVK Hancock. The major befit of the project is creation of employment, revenue benefit to the government and improvement of infrastructure. The project has been seen to have benefits that out way the cost and thus its recommended that the project be implemented. 1.0 Introduction The Abbot Point expansion is a huge development which is located 25km north of the Queensland coastal town of Bowen. The project will seen 5 more coal terminals added to Abbot Point which will bring the total terminals at Queensland coast to 11. The implementation of the project will result to the largest coal port of the world emerging with a capacity of 250Mtpa (Ecoserve, 2005). The project is expected to facilitate the exportation of coal from Galilee Basin. The project involves terminal expansion with addition of a second wharf, a shiploader, additional onshore stockyard and also additional machines will be part of the expansion. The stakeholders of this project are The Proponent for the Project is the Ports Corporation of Queensland, which is Government Owned Corporation, and Adani and GVK Hancock, 2.0 Benefits of the projects Employment and revenue generation The expansion project is expected to generate additional revenue of $1.5billion in terms of exports in Queensland and the economy of Australia. There will be $114 million in terms of value addition for Queensland economy while $19 million of household will be gained per year which will be directed mainly to Bowen region. About 390 full time are expected to be employed either directly or indirectly every year that there will be additional exports. In total the regional workforce is expected to reach a maximum of 950 personnel where 600 will be expected to be involved in site construction at any particular time of the construction stage with the construction period expected to last up to three years (GHD Pty Ltd., 2008). Whenever possible the people to be employed will be sourced locally while the rest will be sourced from the rest of Australia. With the expansion project being highly specialized it will be expected a considerably high proportion of the workforce will be from other region and thus there being need to accommodation provision for the project period. The operation workforce would be expected to increase from to about 100 up from 48 at the point of reaching full capacity of the expansion. Socio-economic Environment The project is significantly far from the area of residence and this puts the chances of there being adverse effect resulting from dust and noise emissions from the project being very low. The operations which are already ongoing in the area have not had any have not seen any complain from members of public and the expansion project is not expected to result to complains. The neighboring community has been provide with valuable employment that include flow-on effect in addition to other economic benefits as a result of the operations being well integrated in the socio-economics of the region. This project is thus expected to see increment in the benefits. With some of the employees set to be hosted in accommodation camp there are expected to be some short term negative effects , though there will be measures put in place to reduce this impacts to minimal. The measures will include ensuring that the camp is located away from the private residences with a separation buffer zone and the workers being taken by a bus to the terminus so as to put additional traffic on the road to minimal. The businesses near the project area are expected to register a positive growth as a result of the project. Infrastructure and Shipping concerns There is no significant pressure that is expected to be put on the infrastructure, but contrary there will be funding as a result of the project that will be directed towards the expansion of infrastructure including water supply system and the sewage system. An increase in the vessels into the port will not bring about a significant increase in the number of users in the off-shore areas. There will be additional risks that will come with the expansion project which include shipping incidents and an increase in the discharge of ballast water at the coast zone. This will be well taken care of by appropriate measures. 3.0 Economic costs The cost put to the items by assigning a value that represent the chance of occurrence of the negative impact. The items that are addressed here fall under the following categories: Marine Flora and Fauna, Marine Water and Sediment Quality, Cultural Heritage and Coastal Processes. Marine Flora and Fauna Investigation into the likely effects of construction and operation of the already existing terminals in 1981 to 1987 indicated that the effects did not go beyond tolerable levels. There has been an off-shore areas study on the impact that is likely to be suffered by development of new berths, berth dredging and disposal of spoil and no substantial ecological values could be associated with the proposed berth area. There is no negative effect that will be no significant impact by the expansion project on significant value areas like Abbot Point Beach. The initial impacts associated with spoil disposal may be significant because of burial, but benthic biota recolonization is expected to rapid where the associated effects are expected to be indiscernible in the first three years of disposal as witnessed in the spoil disposal in 1982 (WBM., 2006). There will be minimal effect on marine mammals as the dredging will undertaken within a short duration of about two weeks and the material to be dredged will be relatively small. Dredging operations effects on turtles will be minimized by undertaking the operations off their nesting season with a turtle excluding device being incorporated on the dredge suction head. Marine Water and Sediment Quality There being no extensive agricultural, industrial or no urban development in the immediate catchment of the project area the off-shore area water of very good quality. Potential effects of sediment plumes resulting from berth dredging and off-shore spoil disposal have been through use of appropriate models for different scenarios where different wind and current direction were used. The modeling results have indicated that there will be occurrence of elevated suspended sediment concentration, but this will not likely to be different from natural periodic fluctuations with the influence of wind and action of waves. Also the dispersion of the sediments is expected to be rapid such that the areas which will be elevated will flatten with a week of the dredging operations. With a short time for dredging of two weeks will ensure that there will be elimination of adverse impacts on off-shore ecological values. There has been evaluation of chances of possible presence of contaminants inside the dredged material in conformation of National Ocean Disposal Guidelines for Dredged Material procedure. The result found no evidence of there being significant levels of potential contaminants and indication that materials could be disposed in unconfined ocean region. Cultural Heritage There are no issues of cultural heritage significance within the expansion area which has been identified. As a result of previous site disturbances and putting into consideration the type of land to be disturbed, potential for such item occurrence is assumed to be low. Areas which have high significance Aboriginal cultural heritage in the Abbot Point area , that includes along the foredune area of the PCQ holdings that has protection within the Port of Abbot Point Strategic Plan, will not be under any disturbance by the proposed works. Coastal Processes There is no infilling of the old berth pocket as the original dredging program show indication existence of minimal marine sediment transport occurrence at the site and/or the ship movements are sufficient to keep sediments in suspension. No indication that there are adverse impacts on coastal processes with the offshore infrastructure and investigations conducted has shown that no further impacts are likely. The proposed re-establishment of the service jetty, which is located to the north-east of the terminal site, for the construction program will have a negligible effect on the stability of the coastline. PV benefits There will be short-term benefits to the regional and national economy in the construction phase. These estimates were made using by use of input-output analysis and are summarized in Table 1. Table 1 Benefits in terms of value added AUD Million $ Regional average National average Total average Direct 270 228.5 498.5 Flow-on 135 213 348 Induced 135 458.5 593.5 Total 539 900 1439 Employment benefits Direct 5556 8147 6725.5 Flow-on 1378 779.5 2157 Induced 1213 2338.5 3551.5 Total 8147 4285.5 12434.5 Operation phase On commencement of operational cost, economic impact will be felt in the local region and nationally as summarized in the table 3. Output AUD Million $ Regional average National average Total average Direct 83.5 48.5 132 Flow-on 33.5 38.5 72 Induced 33.5 83.5 117 Total 150 171 321 Employment benefits Direct 246.5 142.5 389 Flow-on 372.5 142.5 515 Induced 324.5 482 806.5 Total 943 868 1811 4.0 Evaluation of project The items are value using the choice modeling with choice experiment being used. The respondents are presented by alternatives on the various items that are use in the evaluation where they are choose what is preferred most. The baseline alternative represents a situation where the status quo is to remain meaning there is nothing that should be done. From the benefits and cost comparison it can be concluded that the expansion project is beneficial and it thus recommendation is that it should be implemented. References Ecoserve. 2005. Abbot Point and Caley Valley Wetlands Dry Season Flora and Fauna Surveys. Report prepared for Collinsville Coal Company. GHD Pty Ltd. 2008. Baseline Environment Monitoring for Port of Abbot Point: Benthic Baseline Assessment Report. GHD:Brisbane. Ports Corporation of Queensland (PCQ). 2005. Abbot Point Approved Environmental Management Plan (EMP). PCQ: Brisbane. Queensland Government. The Department of State Development, Infrastructure and Planning. Retrieved on 29, sept. 2014 from http://www.dsdip.qld.gov.au/infrastructure-and-planning/abbot-point-expansion-project.html Queensland Government (2007). Abbot Point Coal Terminal Stage 3 Expansion Coordinator-General’s Report WBM. 2006. Abbot Point Coal Terminal, Stage 3 Expansion, Environmental Impact Statement March 2006. WBM:Brisbane. Read More