GROUP ASSIGNMENT topic 6 cost benefit analysis for a national park

National Economics University
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GROUP ASSIGNMENT
Topic 6: Cost - Benefit Analysis For A National Park

Group member

Class
Subject
Professor

✦ HÀ NỘI - 2021 ✦

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A NATIONAL PARK
Table of Content
Option 1. Eco green park
I. Concept:
II. Identify Cost-benefit associated with the project
III. Valuing impacts
Option 2. Creative Park
I. Concept:
II. Identify Cost-benefit associated with the project
III. Valuing impacts
Option 3. Sport Park
I. Concept:
II. Identify Cost-benefit associated with the project
III. Valuing impacts

Option 4. Astronomical Park
I. Concept
II. Identify Cost-benefit associated with the project
III. Valuing impacts

Option 1. Eco green park
I. Concept:
From the entrance of the park, there will be a green path surrounded by trees and
grass with statues made from recycled waste, serving visitors to
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check-in and have a picnic space. In addition, visitors can fully enjoy the
atmosphere with outdoor activities such as cycling, jogging along the road. Picture
1.1. Eco green Park

Besides, there are rows of benches so that guests can stop to avoid the sun under
the trees and enjoy the atmosphere. Moreover, public wastebaskets and
propaganda slogans about preserving the environment are indispensable.
Picture 1.2. Eco Green Park - preserving nature

Going straight to the center will be a bridge spanning a canal with two banks of
flowers surrounding a greenhouse with a tropical landscape inside and a small lake
occupying an empty space at the end of the greenhouse, and the larger space
inside is a place to hold events and exhibitions.
Picture 1.3. Eco Green Park - Flower garden

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Furthermore, to meet the entertainment needs of visitors as well as to increase
profits, the park can sell vending machines so that guests can buy water or fast
food.
II.
Identify Cost-benefit
associated with the project Table
1.1. Cost-benefit analysis
Primary benefits
With market
price
Reduce the cost
of air condition

Create income
from tourism
Reduce
stormwater
management
cost

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Create income
from events,
exhibitions,
vending
machine

Reduce the cost
of healthcare
expenditure
III. Valuing impacts

No

Category

1

Vending machine

2

Events, exhibition

3

Parking

4

Public toilet

5

Bicycle rental service

6

Grass skiing service

7

Children’s playground (sculpture painting,
float home...)
Total

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Table 1.3. Investment capital
Cost
(million
vnd)

No Category

note
green-house construction cost is 300
million VND including transparent

canopy imported fee is 150 million

1 Construction cost
2 Equipment cost
Project
3 management cost
Construction
Investment
4 Consultancy Expense
5 Other cost
Contingency
6 expenses
Compensation
7 expense
Total

Period

No Position

Before

1

operation 2
(from
1 to year 3)

year

After
operation

the 3

(from
4 to

20)

year4
year
Security

5

guard

6

Gardener

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7
8
9

Table 1.4.2. Investment capital (maintenance cost)
No
1

Parking area

2

Gardening

3

Material facility (include lighting
equipment, watering
equipment, CCTV, fence,
vending machine...)

4

Greenhouse

5

Road

6

Waste treatment

7

Canal cleaning

Total

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Table 1.5. The benefits and costs of the project from both private and social

Year
From
year 4

From
year 1 to
year 3

Benefit

From
year 4 to
year 20

Cost
Net profit (private pointview)
Net profit (social pointview)

Table 1.6. The benefit and cost of the non market price
Benefit

Traffic noise
production decrease construction)

Beautiful scene
Enhance the air
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capital

cost


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quality

Recreational activity
(educational and
social benefit)
Cost
Temporary affect the (WTA survey) - how
living environment
of surrounding
people (dust, noise
pollution)

Table 1. 7. Total Cost and Benefit of the Project (Unit: million VND)
Year
Benefit 0,00

1

Cost

8481
Table 1.8. Real Cost and Benefit (Unit: million VND)

Year
0
1
2
3
4
5
6
7
8
9
10

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11
12
13
14
15
16
17
18
19
20
Table 1.9 Net Present value (Unit: million VND)
Year

1

Cash flow
Discount
rate
PV
Accumul
ative

NPV = 54650,76 (million VND)
NPV>0

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Option 2. Creative Park
I. Concept:
A creative park where artworks are exhibited.
Citizens are probably familiar with the common type of parks that are spacious and
filled with trees as well as flowers. This common design is widely popular since it
serves the surrounding habitants’ need for exercising and fresh air which are the
top priorities of visitors according to a study on urban public parks of Leed
university. However, such infrastructures are becoming a norm of every metropolis,
and citizens of the modern age are subtly demanding a form of entertainment and
relaxation of a higher level. In the meantime, never before witnessed a more
impactful movement of artistic creativity in the community. For that reason, The
creative park will be a perfect solution to the matter as it provides a public space for
artists and citizens to enjoys the creative works.
Since there is already a tobacco factory, some minor adjustments to the existing
facility are enough. This will save a great deal of public finance as no large-scale
construction is needed.
Creative park design: Unlike other parks, this infrastructure is designed distinctively
in a very modern way under the cooperation of many artists and architects. The
main theme will be the city of the future which focuses on the special design of
included facilities and the exhibition of artwork within the area of the park.
Picture 2.1. Creative Park

In the middle of the park, the used-to-be factory will be converted to an exhibition
building of which the main purpose is to exhibit artworks.
Main services of this park includes:
-

Parking: This service will require payment
Public space: walk, playing, chilling area

Exhibition: artworks, music

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Cafe: The cafe is installed in the same building as the exhibition so
visitors can enjoy the artwork while chilling
An outdoor movie theater (available at night only)
II.
Identify Cost-benefit
associated with the project Table
2.1. Cost-benefit analysis
Primary benefit
With market
price
- Revenue from
parking service
- Revenue from
the cafe shop
- Revenue from
the movie
theater

III. Valuing impacts
1. Description
An enterprise with 40% foreign capital has a project to build a creative park where
art exhibitions take place
The construction phase starts in the first 3 years and the project goes into

operation from year 4 to year 15
Project revenue comes from:
Coffee shop: on average, 250 bills are sold per day, each bill is 70,000
VND
Cinema: on average, 200 tickets are sold per day, the fixed price of
each ticket is 100,000 VND
Parking area: 150 vehicles per day on average, of which cars account
for 40%. Tickets for motorbikes and cars are 5,000 VND and 50,000 VND
respectively
Profit tax is 25%, resource tax is 7% of the revenue.
Construction investment cost in the first 3 years is 500 million VND/year The
annual operating cost when the project is put into operation is 1 billion VND/year
In the first 3 years of construction, the project hires 100 workers and from the 4th
year onwards hires another 25 people

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The unemployment rate is 20% and all unemployed people think their
value of rest is 50 million VND/year
The average salary per worker is 100 million VND/year.
Assume that 1 year has 360 days

Foreign capital
Coffee shop/ per
day
Cinema/ per day 200

area

Parking
per day
Profit tax
Resource tax
Investment cost
Operating cost

Labor

1 year
2. Valuation
Table 2.3. The benefits and costs of the project from both private and social

Year
Bene Year 4-15
fit

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Year 1-3

Cost
Year 4-15

Net profit = Revenue - Labor cost - Operation cost - Resource tax = 829,224
Table 2.4. The benefit and cost of the nonmarket price
Benefit

Method

Valued
VND/1ha
park
Annual

Physical and
mental
contentment of
surrounding
inhabitants

Contingent valuation method
(survey)

by
of

million
creative

One time

780

A great motivation to Cost of avoidance (value by
artistic activities of exhibition organization costs)
the community
Beautiful view

Fresh air

Total benefits

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Cost

Method

Valued
VND/1ha
park
Annual

Temporary air
pollution

Contingent valuation method
(willingness to accept

compensation to live in an
environment near a
construction site)

Year
Benefit 0,00

1

Cost

10510

by
of

million
creative

Onetime

10

Year
0

1
2
3
4

5
6
7
8
9
10
11
12
13
14
15

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Year

1

Cash flow

-10303,92

Discount rate

0,96

PV

-9907,62

Accumulative

-9907,62

NPV = -16247,10 (million VND)
NPV<0

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Option 3. Sport Park
I. Concept:
This is a project to provide public sport space for people of all ages. It is expected
to enhance citizens' physical as well as mental health, especially for children. This
park is also famous for being the ideal place to hold team building

The main facilities of this park include:
- Outdoor space:
+ Tennis courts, basketball courts, playground for pre-school and school-aged
children
+ 2 picnic shelters (nearby stream)
+ Restroom building with all-gender restrooms
+ A stream where people can join kayak
+ Water fountain
- In-door sport complex

+ Artificial mountain climbing (for kids, adolescents)
+ Trampoline jumping
+ Gym
With an area of around 28 hectares, Sports Park anchors the redevelopment of the
former tobacco factory, and offers a world class destination for all interests. Sports
Park will provide high-quality facilities, not only for major events but also for daily
enjoyment by the community. With a wide variety of sports venues, open spaces,
park facilities, retail and dining outlets, it is set to be an urban oasis to meet the
diverse needs of the public, and professional and amateur athletes.

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Picture 3.1 . Sport Park Design

Picture 3.2. Sport Park Main Facilities

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