Is a costly river restoration project beneficial to the public? Empirical evidence from the Republic of Korea

Abstract

Public water supply service is to provide certain guaranteed level of quantity and quality in any given circumstances. In this regard, public water supply service treated as public goods that either central or state authority governs for good intentions. Growing concerns about water scarcity in national level due to its vulnerability on climate change lead public to suppress economic burden. In fact, Korean government has had a similar concern bringing to construct 16 weirs in the four major rivers. This construction was launched under the name of green growth mega project in 2008 and consumed almost 17 billion dollars up to today for improving water quality and quantity. In this research, six different models were applied to calculate willingness to pay (WTP) for the future water scarcity. If we allow that the mega project lasts for 30 years without any maintenance, the maximum WTP becomes approximately 320 million dollars in 3% discount rate. In addition, if we assume that the Korean economic growth rate becomes much lower than anticipated, the maximum WTP will be about 416 million dollars. None of these numbers is higher than the total construction cost of this mega project under the given conditions.

Keywords:

• Mega project
• Water quality and quantity
• Contingent valuation method
• Probit
• Logic

Acknowledgment

This work was supported by a National Research Foundation of Korea Grant founded by the Korea Government (NRF-2013S1A5B6043772).

Notes

Presented at the 5th IWA-ASPIRE Conference, 8–12 September 2013, Daejeon, Korea

² Population in 2011 was 48,875,000 (http://kostat.go.kr/portal/korea/index.action).

³ Exchange rate was approximately 1 dollar = 1,100 Korean Won.