Creating Valuable CitiesULI Asia ConferenceHong Kong 23 May 2006The Value of a Quality Environment: Creating Valuable Cities ULI Asia Conference Hong Kong 23 May 2006 The Value of a Quality Environment Fiona Waters Director, GHK (HK) Ltd.


Clean Air, Purer Water, Open Space, a Better Harbour How Valuable Are They and can Hong Kong Afford Them?: Clean Air, Purer Water, Open Space, a Better Harbour How Valuable Are They and can Hong Kong Afford Them? ..We would have liked to Develop more Parks, Piazzas, Open Spaces, Cultural and Heritage Sites. But Where is the Money for All These Going to Come From?.. Linkages between a Quality Urban Environment and Competitiveness Underpin the Success of a City Creation of Business Opportunities, more Investment, more Tourism Community Benefits also Have a Value but it is not Expressed in Money Terms Can Hong Kong Afford not to Have More Parks, Piazzas, Open Spaces etc? Opinion Surveys etc provide Evidence but they do not Tell Us Values in Dollar Terms Research Techniques Available Better Understanding of Values and Preferences can Help Decision Making


Sustainable Development in Hong Kong: Sustainable Development in Hong Kong Sustainability Assessments in Hong Kong require Cost Benefit Analysis but Costs and Benefits that are difficult to Measure in Dollar Terms are generally Not Included Example of Harbour Area Treatment Scheme Calls for Studies which Help to Value the Environment/Culture/Heritage in Dollar Terms Air Pollution An Improved Harbour…


Valuing the Community Benefits of Improvements to the Planning and Development of the Harbour: Valuing the Community Benefits of Improvements to the Planning and Development of the Harbour Study Undertaken to Assess the Community Benefits of Improvements to the Planning and Development of the Harbour Commissioned by the Harbour Business Forum (HBF) Nearing Completion Objective to Provide Estimates of the Community Value of Improvements to the Harbour Two Issues Need to be Researched Direction of Preference…More of ‘x’ is Better, Less of ‘y’ is Better Strength of Preference…how Valuable is More of ‘x’ and Less of ‘y’ Establishing Direction of Preference is not Difficult – Ask People But Researching Values More Complex and Requires Care Direction of Preference Builds on the previous HBF Harbour Opinion Survey


Harbour Opinion Survey – Harbour is a Valuable Asset: Harbour Opinion Survey – Harbour is a Valuable Asset Telephone Survey of 1039 Hong Kong Residents, Reported in Feb 2006 80%+ Agreed that the Harbour was Shared by all Hong Kong People Valuable to Them Symbolises the Success and Prosperity of Hong Kong Less than Half rated the Harbour as Good/Very Good Negative Associations were mainly due to Water Quality (57%) Reclamation (48%) Air Quality (38%) Level of Greening (31%)


Harbour Opinion Survey - A Future Harbour: Harbour Opinion Survey - A Future Harbour Unified Vision of What the Harbour Should Be More Greening Areas (88%) More Promenades (77%) More Ground Level Access (73%) Current Level of Resources Devoted to the Harbour is insufficient (58%) More Resources should be Dedicated to the Harbour (89%)


Methods of Valuing Non Market Resources: Methods of Valuing Non Market Resources Revealed Preference – Value is Derived through the Analysis of Behaviour Hedonic Price Models Time Cost Models Dose Response Stated Preference –Value is Derived through Analysis of Surveys Choice Modeling Contingent Valuation


Contingent Valuation: Contingent Valuation Measures Value by Eliciting Willingness to Pay or Willingness to Accept Developed in 1960’s Theory based on Simulation of a Market Popular Name Arose because Elicited Values are Contingent upon Particular Scenario Scenarios Presented in a Variety of Ways dependent on the Subject Matter, Resources, Culture etc Verbal Description Images Video Virtual Reality Pros and Cons Transparent and Direct Method Main Challenge is for Respondents to Understand the Scenario or Outcome


Uses and Experience of Contingent Valuation: Uses and Experience of Contingent Valuation Contingent Valuation is Used For Cost Benefit Analysis Demonstration of Importance Priority Setting Design of Economic Instruments and Pricing Legal Damage Assessment Several Thousand Studies Undertaken Worldwide Studies in Australia, Austria, Canada, China, Costa Rica, Finland, Germany, Italy, Kenya, Malaysia, Netherlands, Norway, New Zealand, Sweden, Taiwan, UK, USA, Vanuatu …. World Bank – 184 member countries Asian Development Bank – 65 member countries Huge Range of Subjects: Protecting Rainforests, Noise, Air and Water Pollution, Endangered Species, Open Space in Urban Areas, Parks, Greenbelt Land More Recently Culture and Heritage Assets as well as the Environment


Exxon Valdez Oil Spill: Exxon Valdez Oil Spill 1989 Exxon Valdez Oil Spill, 11 million Gallons of Crude Oil into Prince William Sound Killed an estimated 250,000 seabirds, 2,800 sea otters, 300 harbour seals, 250 bald eagles, up to 22 killer whales, and an unknown number of salmon and herring Impacts on Recreational Fishing, Tourism Contingent Valuation Conducted Estimated Value of Preventing a Similar Future Accident Estimated at US$2.8 billion, later Estimates up to US$7.2 billion Court Settlement over US$1 billion, Exxon Estimated Clean Up Costs US$2 billion Prompted National Oceanic and Atmospheric Administration to Review Use of Contingent Valuation, Expert Panel concluded that it provides Useful Information provided that Guidelines are met In Practise has Led to Greater Use of Preventative Measures and Better Emergency Response Systems


The Bid for the London Olympics: The Bid for the London Olympics Contingent Valuation Commissioned by UK Department of Culture, Media and Sport Undertaken by Economics for the Environment Consultancy Ltd (EFTEC) Follows UK Treasury Greenbook Guidance on Valuation Objective to Find out the Willingness to Pay of People both within and outside London for the Intangible Benefits of Hosting the 2012 Olympic Games Study Surveyed Representative Samples of Residents: 602 in London and 201 outside Results showed Average Household Willingness to Pay of £22 in London and £12 outside Time Period was set for 10 years Aggregate Value £3.2 billion over 10 years Demonstrated the Communities Strength of Preference for the Bid Helped to Justify and Support the Successful London Bid


Cultural Heritage Sites – the Historic Medina in Fez, Morocco: Cultural Heritage Sites – the Historic Medina in Fez, Morocco Contingent Valuation Commissioned by World Bank, Undertaken in 1997 Pioneering Effort in the Use of Contingent Valuation for Cultural Heritage Sites Medina was in Need of Conservation and Rehabilitation of Housing Stock, Modernisation of Infrastructure and Environmental Improvements including Poor Air and Water Quality Objective to Assess Willingness to Pay for such Improvements Visitors to the Site (US$70 per person) Non-visitors to the Site (US$30 per person) Delphi Survey to Estimated Willingness to Pay of About US$12.1 (Mean) US$2.15 (Median) European Households place a Relatively High Value on Restoration of the Fez Medina Even if only a Fraction of Benefits Received by Visitors could be Captured, this Would Exceed the Investment Requirements World Bank Loan of US$14 Million Approved in October 1998


Centennial Park, Sydney: Centennial Park, Sydney Contingent Valuation, Funded by Centennial and Moore Park Trust Undertaken by Senior Academics Lockwood and Tracey in 1995 Also included Estimate of Travel Cost as an Alternative Valuation Method Covers 220 ha, more than 3.5 million visits per annum Major activities include relaxation, picnics, walking, jogging, cycling, in line skating, cricket, soccer, football, hockey, musicals, outdoor cinema, theatre, art exhibitions and environmental education programs Estimated Value Aus$23 million – Aus$33 million Helped to Justify the Expenditure of Public Money on Management and Maintenance Foundation Set Up in 1998 to Enable People to Donate to Centennial Parklands for Environmental Projects


Recreation-Amenity Use of Urban Greenspaces in Guangzhou: Recreation-Amenity Use of Urban Greenspaces in Guangzhou Contingent Valuation, Academic Research by Department of Geography HKU Professor C.Y. Jim and Wendy Y. Chen Importance of Recreational Opportunities and Amenities Created by Green spaces Small and Low Quality Sites Near Homes were Shunned Accustomed to Paying Green space Entrance Fee Willingness to Pay RMB17.40 /person/month, Higher than Actual Fee Payment Aggregate Value RMB547 million per year, 6 times Guangzhou Expenditure on Urban Green space Verifies Applicability of Contingent Valuation to Urban Green spaces in China Assist Cost Benefit Analysis to Justify More Resources? Incorporating Public Opinions into Planning for Sustainable Cities


Clean Air, Purer Water, Open Space, a Better Harbour How Valuable Are They and can Hong Kong Afford Them?: Clean Air, Purer Water, Open Space, a Better Harbour How Valuable Are They and can Hong Kong Afford Them? Can Hong Kong Afford Improvements to the Urban Environment? Opinion Surveys Have Clearly Demonstrated Community Preferences Important for Long Term Competitiveness Can We Afford Not To? Research Techniques Used Elsewhere Could be Adopted and Adapted Provide Better Information About the Strength of Preferences Create a Place for Business, to Live, Work and Visit - a Valuable City with a Quality Environment