Stoch Environ Res Risk Assess (2011) 25:341–351 DOI 10.1007/s00477-010-0372-5
ORIGINAL PAPER
Integrating ecological damages into the user charge for land reclamation: a case study of Xiamen, China Benrong Peng • Weiqi Chen • Huasheng Hong
Published online: 23 February 2010 Springer-Verlag 2010
Abstract Land reclamation has become one of the great concerns of many coastal states for its serious environmental and ecological effects. User charge is an effective market-based approach for regulating land reclamation. The user change should be designed to reflect the full effect of converting sea to land to ensure sustainable use of marine resources. In this paper, we present an ecologicaleconomic framework to estimate the user charge that covers both the ecological damages and the rent associated with the reclaimed land. We apply the framework to Xiamen’s West Sea. Results of the case study suggest that the rents of reclaimed land for industrial and commercial uses are 49 yuan/m2 and 1,066–2,704 yuan/m2, respectively. The unit value of ecological damages of land reclamation is 605 yuan/m2. The present user charge is too low to regulate excessive land reclamation. The user charge for land reclamation in the study area should be modified to 653 yuan/m2 for industrial uses and 35–40% of adjacent land prices for commercial uses. Keywords Land reclamation Ecological damage appraisal User charge Xiamen
1 Introduction Remarkable biological productivity and high accessibility have made coastal areas the centers of human activity for millennia (World Resources Institute (WRI) 2001). Half of
B. Peng W. Chen H. Hong (&) Joint Key Laboratory of Coastal Study of Xiamen University and Fujian Institute of Oceanography, Environmental Science Research Center, Xiamen University, Xiamen 361005, China e-mail:
[email protected]
the world’s population, production and consumption activities are concentrated in the coastal zone which accounts for only 10% of all land area (Pernetta and Elder 1993). Land shortage has been a common problem in coastal regions with high population density. Creating new land from sea provides a solution to the problem. Reclaimed land has been used to increase food production, to attract new investment to cities, and to create new areas for urban development (United Nations (UN) Atlas of the Oceans 2006). Unfortunately, land reclamation also creates serious environmental risk (Tian-Hong et al. 2008; Zhang et al. 2009; Chang and Ni-Bin 2005). The conversion of sea to land permanently changes the natural characteristics of the coastal environment and may lead to considerable damages to the marine ecosystems (Xia et al. 2007; Hoeksema 2007; Airoldi and Beck 2007; Halpern et al. 2008). The coastal and marine ecosystems provide various services to the society, such as storing and cycling nutrients, filtering pollutants from inland freshwater systems, protecting shorelines from erosion and storms, regulating global hydrology and climate, accepting and assimilating waste, and providing food and materials (de Groot et al. 2002). All these services can be destroyed by land reclamation. In China, about 10.5 million ha of tidal lands have been reclaimed since the 1950s. This led to the losses of almost half of the country’s tidal lands and about 70% of the country’s mangroves (PEMSEA 2003). In an effort to control land reclamation and associated negative environmental impacts, a user charge regime has been developed under the Sea Area Use Management Law of 2002. The user charge for a land reclamation project is a one-time payment by the developer to the government, the owner of the sea areas. However, the user charge standard for land reclamation has been too low to curb excessive reclamation
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in coastal provinces (Jiang 2008; Chen and Zhang 2008; Yan 2008; Chen 2009). From 2001 to 2005, the annual rate of land reclamation was around 300 km2 (State Oceanic Administration (SOA) 2006). One of the main reasons for the low user charge is that the current standard is only based on the rent (net revenue) of reclaimed land and does not reflect the full effects of associated ecological damages. Note that, unlike land rent, costs associated with ecological damages are typically not captured by the market for coastal land development. As a result, developers are not paying the full cost of resource use (Greiner et al. 2000). Therefore, the current user charge standard should be modified to capture the full cost of land reclamation. Although there is a large volume of literature on the valuation of marine and coastal resources such as beaches, mangroves, and coastal wetlands (Ledoux and Turner 2002), we are unaware of any analysis that integrates both market and non-market valuation studies for the design of a user charge for coastal land reclamation. In this study, we develop an ecological-economic framework that can be used by coastal managers to improve the design of the user charge standard. In Sect. 2, we first identify the coastal ecosystems and their services damaged by land reclamation. We then present a set of equations to estimate various ecological damages associated with land reclamation. Next, an approach to calculate the rent of reclaimed land is discussed. Finally, we described the design of the user charge for land reclamation. In Sect. 3, we apply our framework to establish user charge standard for land reclamation in Xiamen’s West Sea. Discussions and conclusions are included in Sects. 4 and 5.
2 Methods
Stoch Environ Res Risk Assess (2011) 25:341–351
There is a growing literature on ecosystem services and their benefits to society (e.g., Costanza et al. 1997; Daily 1997; Daily et al. 2000; de Groot et al. 2002). Summarizing relevant studies, the Millennium Ecosystem Assessment provides an operational classification system for ecosystem services (MEAB 2003). The system includes four types of ecosystem services: provisioning, regulating, cultural, and supporting. Within each category, there are several specific sub-services providing one or more benefits to humans. We extract marine and coastal ecosystem services from the Millennium Ecosystem Assessment, and the results are listed in the first column of Table 1. As shown in Table 1 are the levels of importance of different services provided by each ecosystem. Generally, land reclamation occurs in the coastal zone and nearshore. The ecosystems damaged by the activity include mangroves, mudflats, beaches, coral reefs, sea grass, and seaweeds. From Table 1, we see that the main services affected by land reclamation include: air quality maintenance and climate regulation, flood control and shoreline protection, nutrient cycle and storage, waste treatment, biological control and habitat, marine fishing and mariculture, scenic beauty, recreation, and science and education. Land reclamation may affect the services of adjacent ecosystems in addition to those of the filled areas. For example, reclaiming an area may affect the water quality of a much wider area as well as threaten fish stocks and habitats in neighboring coastal regions. Siltation due to land reclamation may affect marine transportation. To capture the complex interactions between a specific land reclamation project and indirectly affected ecosystems, models of an integrated engineering-ecological-economic system must be developed, which is beyond the scope of this study. The present study is based on a set of simple equations which calculate the key components of damages directly associated with the sea area to be reclaimed.
2.1 Ecological damages of land reclamation 2.2 Estimation of ecological damages Marine and costal ecosystems provide various goods and services to society. To estimate the value of ecological damages associated with land reclamation, we must first identify specific damages to different types of services provided by different ecosystems. Coastal areas encompass a broad range of habitat types, and it is a complex task to identify and clarify the coastal ecosystems. For the study, we identify the ecosystems affected by land reclamation using two important information sources: the Land–Ocean Interactions in the Coastal Zone (LOICZ 2005), a core project of the International Geosphere-Biosphere Programme, and the Coastal Systems of Europe project (EUCC 2005). The resulting marine and coastal ecosystems are shown as column labels in Table 1.
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2.2.1 Air quality maintenance and climate regulation Services of air quality maintenance provided by marine and coastal ecosystems involve the maintenance of clean, breathable air and the prevention of diseases (e.g., skin cancer) through photosynthesis of coastal plants (e.g., mangrove) and phytoplankton to absorbing CO2, releasing O2, and accepting other gases. In addition, coastal ecosystems play an important role in climate regulation by limiting the greenhouse gases. Land reclamation converts sea to land and destroys mangroves and phytoplankton, thereby disabling the provision of these services. The lost ability to fix CO2 and supply O2 can be quantified and the
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Table 1 Coastal ecosystems and services Services
Coastal ecosystems Cliff Shingle Mudflats Beach Estuary Lagoon Salt marsh Coral reefs Mangrove Kelp
Sea grass
Provisioning services Food
?
??
?
???
??
??
???
???
??? ???
Materials
?
??
???
???
??
??
???
???
??? ???
???
??
??
???
???
??? ???
???
??
??
???
???
??? ???
??
??
???
???
Genetic resources Medicines
?
Ornamental
???
Water supply Mariculture
??
??
??? ???
?? ??
?? ??
??? ???
??? ???
??? ???
Regulating services Air quality maintenance
??
??
???
??
???
??
???
??? ???
Climate regulation
??
??
???
??
???
??
???
??? ???
Water regulation
??
??
???
??
??
Storm protection
??
???
???
??
???
??
???
???
??
??
??
???
??
Erosion control
??
??
Waste treatment
??? ??
???
??? ???
???
???
??
??
???
???
??
???
Pollination Biological control Cultural services Aesthetic values
??
??
???
???
??
???
???
???
??
???
Recreation and ecotourism
??
??
???
???
??
???
???
???
??
???
???
???
??
???
???
???
??
???
???
??
???
???
??? ???
???
???
Cultural diversity Spiritual and religious value Education values
??
Supporting services Primary production
??
Soil formation Nutrient cycling Habitat
??? ?
?
???
??
???
??
???
??
???
??? ???
???
??
???
???
???
??
???
Note: ?, ??, and ??? denote low, medium, high levels of importance, respectively
associated ecosystem service value can be used to measure the ecological damage of land reclamation to air quality maintenance and climate regulation. Three variables are needed to calculate the value: (1) the weight of dry materials (carbon) produced in the ecosystems (gram), (2) the weight of fixed CO2 and supplied O2 per gram of dry materials, and (3) the costs of fixing CO2 and supplying O2. According to the following formula of photosynthesis and respiration, when marine and coastal ecosystems produce 1 g of dry material, the amounts of CO2 absorbed and oxygen released by them are 1.63 g and 1.19 g, respectively. 6772cal
CO2 ð264 gÞ þ H2 Oð108 gÞ ! C6 H12 O6 ð180 gÞ þ O2 ð193 gÞ ! Amylaseð162 gÞ Thus, we can estimate the ecological damage to air quality maintenance and climate regulation as:
Par ¼ ð1:63CCO2 þ 1:19CO2 ÞX
ð1Þ
where Par is the value of damage to air quality per square meter of reclaimed land (i.e., lost sea); CCO2 and CO2 represent the costs of fixing CO2 and supplying O2; and X is the amount of dry materials lost per square meter of reclaimed land. 2.2.2 Flood control and shoreline protection Flood control and shoreline protection services are mainly provided by mangroves. The damage to mangroves is calculated as: Pdr ¼ Bdc =Sm
ð2Þ
where Pdr is the value of damage to flood control per square meter of reclaimed land; Bdc is the benefit of mangroves in controlling flood and protecting shorelines; and Sm is the total area of mangroves lost due to land reclamation.
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2.2.3 Nutrient regulation Nutrient regulation services provided by marine and coastal ecosystems can be broadly divided into two categories: (1) providing the nutrients to marine species through food web; and (2) their role as N and P sinks. If the oceans were not there, we would have to create this function by removing N and P from land runoffs and recycling it back to the land (Costanza et al. 1997). The value of the first category is reflected in services like marine fishing and habitat. We only consider the damage to the second category to avoid double counting. Since the benefit of sea as a nutrient sink may be estimated using cost avoided for wastewater treatment, the ecological damage is: Pnr ¼
QC S
ð3Þ
where Pnr is the value of damage to nutrient regulation per square meter of reclaimed land; Q is the total amount of land runoffs to the sea; C is the treatment cost per cubic meter of wastewater; and S is the area of the sea accepting these runoffs.
ecosystems by controlling pests and diseases. Ultimately, its value is reflected in the quantity and quality of marine fisheries. Similarly, the value of nursery habitat, which provides the survival conditions for commercially harvested species such as fish and shellfish, is also captured by the quantity and quality of fishery landings. To avoid double counting, we only include damages to nursery service by land reclamation. Because the filled sea areas are typically habitats for shellfish, such as mollusks, we can estimate the damage using the relationship between primary production and mollusks, the weight ratio of shellfish to mollusks, the market price and profit rate of shellfish: Phr ¼
P0 E rPs qs d
ð5Þ
where Phr is the value of damage to nursery service per square meter of reclaimed land; P0 is the primary productivity (carbon) of the filled sea area; E is the transfer efficiency between primary production to mollusks; r is the weight ratio of shellfish to mollusks; Ps is the average price of shellfish; qs is the profit rate of shellfishing; and d is the mixed ratio of carbon in shellfish. 2.2.6 Mariculture
2.2.4 Waste treatment Besides N and P, the marine and coastal ecosystems also provide treatment to other wastes. Land reclamation leads to a reduction in local marine space, thereby lessening tidal flow and the capacity to carry wastes. The value of damage to this service can be calculated based on the change in marine environmental carrying capacity. Let the annual carrying capacity for pollutant i be xi, the treatment costs of pollutant i be ci, and the volume of the sea water be Q, the value of ecological damage per cubic meter of sea water Dv is: n X Dv ¼ xi ci =Q
Providing space for mariculture is one of the major marine and coastal ecosystems services. Inter-tidal areas are primary locations for fish farming. Land reclamation reduces the space for mariculture, and the associated damage is: Pmc ¼
Rmc Cmc Smc
ð6Þ
where Pmc is the value of damage to mariculture per square meter of land reclaimed; Rmc is the annual revenue of mariculture; Cmc is the annual cost of mariculture; and Smc is the total area for mariculture. 2.2.7 Habitat for endangered species
i¼1
where i (=1, 2,……n) is the index for the treated pollutants. If the depth of filled sea area is h, the value of damage to marine environmental carrying capacity per square meter of reclaimed land per year Pev can be computed as: Pev ¼ h
i¼n X
xi ci =Q
ð4Þ
i¼1
2.2.5 Biological control, habitat and marine fishing Services of biological control, nursery habitat, and marine fishing provided by marine and coastal ecosystems are inter-connected, and their values overlap. The service of biological control maintains the balance of marine
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Besides providing habitat for the commercial harvesting species, the marine and coastal ecosystems are crucial to the maintenance of earth’s biodiversity. Land reclamation destroys the refugium service provided by the ecosystems for wild species, which leads to a reduction of biodiversity. To assess the damage to biodiversity, we first estimate the values of wild and endangered species in the relevant marine and coastal ecosystems, and then calculate the contribution of lost sea area to these values. The unit damage is: Pbd ¼
Vbd Sc
ð7Þ
where Pbd is the value of damage to biodiversity per square meter of reclaimed land; Vbd is the total value of wild and
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endangered species in the region; and Sc is the coastal area contributing to biodiversity. 2.2.8 Recreation Marine and coastal ecosystems provide important recreational services. Beaches, mangroves, and coral reefs have considerable amenity values, which will lost due to land reclamation. The damage to recreation can computed as: Ptr ¼
Vtr Str
ð8Þ
p ¼ qðI þ O þ vÞ
ð10Þ
where q is the average rate of return on investment. Because of differences in project operation, management, and location, the rate of return on investment varies across different reclamation projects. We use the average rate of return to reflect value of a typical project. The tax payment consists of two parts, one is a tax on the rent of reclaimed land, and the other is a tax on project revenue: T ¼ t1 R þ t2 v
ð11Þ
where Ptr is the value of damage to recreation per square meter of reclaimed land; Vtr is the lost recreation value associated with the land reclamation project; and Str is the total area of sea filled.
where t1 is the tax rate on revenue; and t2 is the tax rate on the rent. Substituting Eqs. 10 and 11 to Eq. 9, we have the equation to estimate the present value of unit rent, Ppf:
2.3 Estimation of rent for reclaimed land
Ppf ¼
When a sea area is converted to land, the reclaimed land can be used for industrial, commercial, agricultural, and other purposes. Note that the sea area is publicly owned and the reclaimed land will typically be in private hands. The land will be an input factor of production, and the rent generated from the reclamation project and subsequent production process should be included in the user charge for land reclamation. The rent for reclaimed land is affected by the market for existing coastal land and the costs for reclamation. We develop an approach to estimate the value of the sea areas to be filled, as the market for sea area does not exist. Rent of a natural resource is a surplus, the difference between the price of a good produced using the resource and the unit cost of turning the natural resource into the good. The unit cost reflects the value of labor, capital, materials, and energy inputs (Hartwick and Olewiler 1997). Following this thought, the rent of reclaimed land can be established as: v¼RIOpT
ð12Þ
where S is the area of reclaimed land. 2.4 User charge for land reclamation As noted, the user charge for land reclamation should include both the rent of the reclaimed land and associated ecological damages. We use Eq. 12 to estimate the rent, and Eqs. 1 through 8 to calculate the annual damages to various services of the marine and coastal ecosystems. The value of the total ecological damage is the discounted sum of damages to individual ecosystem services, considering the time value of money2: n X Pi ð13Þ Ped ¼ r i¼1 s where Ped is the value of total ecological damage per square meter of reclaimed land; Pi is the value of damage to service i; rs is the discount rate; and i (= 1, 2, 3…, n) is
ð9Þ
where v is the rent of sea area to be reclaimed; R is the revenue of the reclamation project; I is the fixed investment (not including the expenditure to purchase sea area for reclamation); O is the operating costs (including labor costs); p is the normal (accounting) profit of the project; and T is the tax payment. Here, R, I, O, p, T are in present values.1 Accounting profit of a project is equal to the total investments in the project times the rate of return on investment:
1
v ð1 t1 ÞR ð1 þ qÞðI þ OÞ ¼ S Sð1 þ q þ t2 Þ
The rent of reclaimed land is analyzed from the perspective of developers (a private financial analysis). Tax payments are real costs to the developers.
2
Because the marine and coastal ecosystems provide yearly services, and land reclamation destroys these services permanently, the time value of money must be considered in calculating the value of total ecological damages of land reclamation. It must be stressed that the discount rate in Eq. 13 is the social rate of discounting rather than private discount rate. There is no agreeable opinion about the specific value of the social discount rate. Generally speaking, however, the use of a long term, real government bond rate is a practical alternative (MPP-EAS (Regional Program for the Prevention and Management of Marine Pollution in the East Asian Seas) 1999). EPA (2000) suggests using 1.5%, 2–3%, and 7% (as in intra-generation case) as the social discount rates to conduct sensitivity analysis while including a ‘‘no discounting’’ scenario in economic analysis of public policy. In this paper, we use 2% as the social discount rate.
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the index of different services provided by marine and coastal ecosystems. According to Eqs. 12 and 13, we calculate the user charge of land reclamation as: n ð1 t1 ÞR ð1 þ qÞðI þ OÞ X pi User charge ¼ þ ð14Þ Sð 1 þ q þ t 2 Þ r i¼1 s Equation 14 establishes an average user charge. It may underestimate the value of filled sea areas that provide high and important ecosystems services, or overestimate the value of areas that provide low or unimportant ecosystems services. Note that the revenue (R) of a reclamation project is different in different areas and for different uses, which will affect the user charge.
3 Empirical estimation In this section, we establish the user charge for land reclamation in the West Sea of Xiamen using the above framework. We first discuss data sources of our analysis, and then describe empirical estimations of ecological damages, the rent of reclaimed land, and the user charge. Located at the southeastern coast of China’s Fujian Province, to the west of Taiwan Strait, Xiamen covers a land area of 1,565 km2 and a sea area of 344 km2 with a coastline of 234 km. Its coastal waters can be divided into West Sea, East Sea, Dadeng Sea, Tong’an Bay, and Jiulongjiang River estuary (Fig. 1). Xiamen’s economy depends heavily on its surrounding seas for natural Fig. 1 Xiamen and coastal waters
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resources, goods and services. Land deficit is a severe problem for Xiamen with its rapid economic development characterized by industrialization, urbanization, and population growth. Land reclamation provides an easy solution. The area of land reclamation reached 112 km2 from 1955 to 2006, of which, 62 km2 reclamation occurred in the West Sea, resulting in a reduction of more than half of the total area of the West Sea (Zhang and Chen 2008). While providing space for urban development, land reclamation has destroyed the marine and coastal ecosystems on which Xiamen depends. In 1997, Xiamen adopted economic incentives to regulate land reclamation by charging a usage fee for marine space. Currently, the leasing price of coastal land is 3,500–10,000 yuan/m2 (for commercial use), and the user charge is 105–180 yuan/m2, too low to control land reclamation. The area of reclaimed land grew 7.61 km2 from 1998 to 2002, despite the implementation of the user charge policy. Xiamen is still facing considerable pressure of land reclamation from various sectors and interest groups. Xiamen urgently needs to establish a sound user charge standard (UCS) to restrain land reclamation and to ensure sustainable development. 3.1 Data We assembled data for the study from various sources, including Xiamen municipal government agencies in charge of marine, fisheries, tourism, environmental protection, and statistics, as well as industrial organizations, such as Xiamen sewage treatment plants. In addition, we
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Table 2 Data sources Items
Resultsa
Indicators
Data sources
Weight of dry materials; costs of fixing CO2 and supplying O2
Leader Group Office of Integrated Survey in Xiamen Island Resources (1996); Woodward and Wui (2001); Xue (1997), Chen (1994)
0.16
Supplying O2
Flood control and shoreline protection
Benefits of mangroves avoiding flood and typhoon
Han et al. (2000)
0.8
Nutrient regulation
Amount of waster water with N and P, treating costs
XMEMC (2000), Xiamen Sewage Treatment Plants
1.08
Waster treatment
Environmental carrying capacity for COD, treating costs
Chen et al. (1999); (Third Institute of Oceanography, State Oceanic Administration (TIO) 1995)
0.6
Primary productivity, transformation efficiency, selling price and profit rate, mixed carbon ration in shellfishes
Leader Group Office of Integrated Survey in Xiamen Island Resources (1996); Tait (1981); Lu et al. (1999); Xiamen Ocean and Fisheries Bureau; Xiamen Aquatic Industry Association
1.09
Ecological damages Fixing CO2
Nursery
Biodiversity
Value of endangered species, areas of seas
Peng et al. (2004); Hong et al. (2005)
1.65
Mariculture
Areas, revenue and costs of aquaculture, areas
Fujian Aquaculture Research Institute (2002)
2.35
Recreation
Value of recreation, areas
Peng et al. (2004), Hong et al. (2005)
5.16
Total ecological damage
12.89
Rent of reclaimed land
a
For industry use
Revenue, fixed Investment, Operational costs, Tax
4th INEED (2002); ESRC (1995)
For commercial
Prices of adjacent land, costs of filled seas, operating costs, tax
Xiamen Land and Real Estate Bureau; TIO and 4th INEED (2002); PDRINBYR (2003)
Unit: yuan/m2a (RMB yuan per square meter per annum)
collected secondary data from published literature, unpublished reports, and industry and public surveys. The Third column of Table 2 lists complete data sources for each sector group in the study. Considering that the filled seas are mainly used for industrial zone development, urban development and, real estate development, we established user charges for reclamation for industry use and commercial use (including real estate use) in our study.
(2)
3.2 Results 3.2.1 Ecological damages (1)
Air quality maintenance and climate regulation According to Leader Group Office of Integrated Survey to Xiamen Island Resources (1996), the average primary productivity is 181 mgC/m2 d in Xiamen’s West Sea, and the annual production of carbon is 66.07 gC/m2. The international carbon tax rate is 150 USD/t(C) (Woodward and Wui 2001), and the average costs of reforesting is 250 yuan/t (C) (Xue 1997). We took the average value, 750 yuan/t (C), as the cost of fixing CO2. The cost of supplying
(3)
O2 is 370 yuan/t (Chen 1994). Using these data and Eq. 1, we calculate the value of damage to air quality maintenance and climate regulation of land reclamation as 0.16 yuan/m2a (RMB yuan per square meter per annum). This value does not include the service value of mangroves because the area of mangroves in Xiamen is now very small. Flood control and shoreline protection The study of Han et al. (2000) shows that the benefit of mangroves (with 1 km length and 100 m width) for avoiding flood and typhoon is 80,000 yuan. According to Eq. 2, the value of damage to flood control is 0.8 yuan/m2a. Nutrients regulation The annual amounts of N and P discharged into Xiamen Seas are 18,829.9t and 720.2t, respectively (Xiamen Environment Monitoring Center (XMEMC) 2000). We estimate that the amount of wastewater with N and P discharged to seas is 4.67 9 108 m3 per year according to the concentrations of the N and P (40.3 mg/l, 4.13 mg/l). According to Xiamen sewage treatment plants, the treatment cost of wastewater with N and P is 0.8 yuan/m3. The sea area of Xiamen
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(4)
(5)
(6)
(7)
(8)
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is 3.44 9 108 m2. Plugging these data into Eq. 3, we obtain the value of damage to nutrient regulation as 1.08 yuan/m2a. Waste treatment Marine and coastal ecosystems provide treatments to many pollutants. We focus on COD to avoid double counting. The environment carrying capacity of COD is 17,520 t/a in the West Sea, and sea’s volume is 2.52 9 108 m3 (ITO 1995). The treatment cost of COD is 4,300 yuan/t (Chen et al. 1999). We consider the average tidal height of 2 m in Xiamen as the depth of water. According to Eq. 4, the value of damage to waste treatment is 0.60 yuan/m2a. Biological control and habitat for commercial species As noted above, the average production of carbon is 66.07 gC/m2a in Xiamen seas. According to Tait (1981), 10% of primary productivity is transformed to mollusks. The mixed ratio of carbon in mollusk is 8.33%, and the weight ratio of mollusks to shellfish is 1:5.52 (Lu et al. 1999). The price and profit rate is 10 yuan/kg and 25%, respectively, according to a survey of Xiamen Ocean and Fisheries Bureau and Xiamen Aquatic Industry Association. From Eq. 5, we determine that the value of damage to nursery habitat is 1.09 yuan/m2a. Mariculture According to the study of Fujian Aquatic Research Institute (2002), the annual profits of various types of aquaculture in Xiamen sea areas are: stone bank purse net, 3.00 yuan/m2; clay bank purse net, 2.55 yuan/m2; pell-mell oyster, 2.40 yuan/m2; stone oyster, 1.80 yuan/m2; laver, 2.25 yuan/m2; and clam, 2.10 yuan/m2. Thus, the average profit of mariculture is 2.35 yuan/m2. According to Eq. 6, the value of damage to mariculture is 2.35 yuan/m2a. Habitat for wild species The endangered species in Xiamen include Chinese white dolphin, lancelet, and egret. According to the study of Peng et al. (2004) and Hong et al. (2005), the values of the three endangered species are 167.48 million yuan/a, 147.66 million yuan/a, 126.26 million yuan/a, respectively. The West Sea, with an area of 5.32 9 107m2, contributes mainly to the habitat of Chinese white dolphin and egret. From Eq. 7, the value of damage to biodiversity is 1.65 yuan/m2a. Recreation Xiamen’s marine and coastal ecosystems provide considerable recreational resources. According to Peng et al. (2004), the amenity value of water quality is 219.67 million yuan/a, and the value of beaches is 103.18 million yuan/a. We use the sum of these values as the recreational value in Xiamen and ignore other relevant values due to lack of data on other
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(9)
recreation resources. According to Eq. 8, the value of damage to recreation is 1.66 yuan/m2a. Another part of the recreation value provided by the marine and coastal ecosystems is the beautiful marine landscape. According to the study of Hong et al. (2005), the value of the landscape of West Sea is 189.90 million yuan/a. From Eq. 8, the value of damage to landscape is 3.5 yuan/m2a. Total ecological damage Subsections (1) to (8) estimate the values of damages of land reclamation to various marine and coastal ecosystem services. Using Eq. 13, and 2% as the social discount rate, we calculate the value of total ecological damage associated with land reclamation is 604.5 yuan/m2. This value does not include the damage to flood control and shoreline protection. As noted, the area of mangroves in Xiamen is now very small, and including the benefits of mangroves may overestimate the ecological damage.
It must be stressed that the above calculation covers only the main components of ecological damages of land reclamation due to data restrictions. The estimation results can be used as the minimum user charge for ecological compensation. 3.2.2 Rent for reclaimed land We use the data from representative land reclamation projects in Xiamen to estimate the rent for reclaimed land. (1) For industrial development The leasing price of adjacent cannot be used to measure the revenue of reclaimed land when it is used for industrial development, because the price of industrial land is controlled by the government. Developers of industrial land recover their investments by selling the filled areas at the government-set price and by receiving subsidies from the government (sometimes in the form of tax rebates). The two most representative projects involving land reclamation in Xiamen are the first and second phases of the development of the Xiangyu Free Trade Zone. Using data on benefits and costs of these two projects (Environmental Science Research Center (ESRC) 1995; 4th Institute of Navigational Engineering Exploration, Design (4th INEED) 2002) and Eq. 12, we estimate the rents of reclaimed land for industrial development as 49.49 yuan/m2 and 48.15 yuan/m2, respectively, with an average of 48.82 yuan/m2. (2) For commercial use Leasing price of the adjacent land is used to measure the revenue of reclaimed land for commercial uses.
Stoch Environ Res Risk Assess (2011) 25:341–351 Table 3 User charge for land reclamation in Xiamen West Sea Industrial uses
349
Rent of reclaimed land (yuan/m2) (1)
Value of ecological User charge (yuan/m2) Percent to adjacent damages (yuan/m2) land price (%) (2) (3) = (1) ? (2)
48.82
604.5
Commercial uses 1,066.37–2,704.42 604.5
According to the Xiamen Land Resources and Estate Bureau, the average auction price of coastal land around West Sea ranges from 5,000 yuan/m2 (outside of the Xiamen Island) to 10,000 yuan/m2 (on the Xiamen Island). The fixed investment (costs of filling the sea) is 600 yuan/m 2 (Third Institute of Oceanography, State Oceanic Administration (TIO) and 4th Institute of Navigational Engineering Exploration and Eesign, Ministry of Communication (4th INEED) 2002; Panning and Design Research Institute of Navigational Bureau of Yangtze River (PDRINBYR) 2003); the operation cost is 15% of the investments; the tax rate on the revenue (t1) is 7.75% of the land price, and t2 is 0. According to our survey, it typically takes less than 2 years for a developer to complete a land reclamation project after purchasing the sea area. It will then take 3 years for the reclaimed land to settle down and compact. The developers will sell the reclaimed land from year 7. Typically, 40% and 60% of the land are sold in year 7 and year 8, respectively. Assuming an average annual rate of return of about 10% and employing 8% discount rate (the long-term bank loan rate), the total rate of return on investment over 8 years is 57%.3 Plugging the above numbers into Eq. 12, we have the rent of reclaimed land for commercial uses as 1,066.37 yuan/m2–2,704.22 yuan/m2. 3.3 User charge for land reclamation in Xiamen West Sea
We have established the UCS for land reclamation in Xiamen’s West Sea. Comparing the estimation results with current UCS (105–180 yuan/m2),4 we see that even the rent 3
The P formula for calculating the rate of return on total investment is: q Tq ¼ 8t¼1 ð1þrÞ tþ1 . 4 This value was 30–60 yuan/m2 before 2007.
1,670.87–3,308.92
35–40
of reclaimed land for commercial uses is greater than the current user charge. The current UCS does not reflect the value of sea areas to be reclaimed as a production factor, let alone the value of ecological damages. The low UCS has led to excessive land reclamation, significant damages to the marine and costal ecosystems, and losses of economic rent. Xiamen should modify its user charge by integrating the rent of reclaimed land and the value of ecological damages to ensure the sustainable use of its marine and coastal ecosystems. It must be also emphasized that the UCS for land reclamation in Xiamen is higher than those in other regions in China (Wang 2002). Thus, the UCS in other regions must also be modified. In Table 3, we establish the relationship between the user charge for commercial uses and the price of adjacent land (the charge is 35–40% of adjacent land price). This is very useful for policy purposes. As the rent of reclaimed land changes with the adjacent land price, user charge can be adjusted accordingly, without changing management policy frequently. Unfortunately, we cannot establish such a relationship between user charge for industrial uses and the adjacent land price, because the land prices for industrial uses are controlled by the government. Generally, controlling the prices of land for industrial uses is a favored policy for the local government to attract more investments. As noted, our model is designed to estimate the average UCS. In practice, three measures can be used to correct biases associated with under or overestimation: (1)
Using the estimation results from Sects. 3.1 and 3.2 and Eq. 14, we can establish the UCS of reclaimed land for industrial and commercial uses (Table 3). The UCS is 653.32 yuan/m2 for industrial uses and between 1,670.87 and 3,308.92 yuan/m2 for commercial uses.
4 Discussions
653.32
(2)
Zoning. The rent of reclaimed land and the value of ecosystem damages are different at different locations. We can develop a function zoning scheme for the marine and coastal areas according to their natural conditions and social economic development level, and then establish user charge for each specific zone. This approach can partly correct the imprecision of the user charge due to differences in natural and socioeconomic conditions. Establish the user charge according to use type. The rent of reclaimed land varies across different industries, although the ecological damage may be the same. The user charge should be set according to a specific use. Generally, the filled sea areas can be used for agriculture, industrial, or commercial operations. Different user charges may be developed for different uses to overcome the imprecision of the user charge.
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350
(3)
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Regulation. The user charge based on average ecological-economic conditions is not enough to ensure the protection of very important ecosystems, such as crucial habitat for wild species and endangered species. Regulation is necessary to prohibit land reclamation in key areas. Only the combination of regulation and the user charge (economic instruments) can improve the regulation effectiveness of land reclamation.
5 Conclusions Land reclamation permanently changes or destroys relevant marine and coastal ecosystems. We must understand the tradeoffs between benefits associated with reclaimed land and related costs including damages to the ecosystems to ensure sustainable use of the marine and coastal ecosystems. A usage fee for land reclamation has been recognized as a potentially effective economic instrument to control the activity, if the user charge is soundly designed. Both the rent of reclaimed land and the ecological damages should be integrated into the user charge so that developers pay the full costs of land reclamation. The framework developed in this study can be used to establish the user charge standard for reclamation. Results of our analysis indicate that the UCS for Xiamen’s West Sea should be 653.32 yuan/m2 for industrial uses and that the charge for commercial uses should be 35–40% of adjacent land price. The current UCS of Xiamen is too low to regulate land reclamation and to secure relevant economic rent for the owner of marine resources. Xiamen should correct its user charge by integrating the rent of reclaimed land and the value of ecological damages to ensure the sustainable development. The user charges in other parts of China should also be modified considering that fact that the current user charge in Xiamen is the highest in China. The model developed in the study can be used to establish an average user charge. However, the rent of reclaimed land and ecological damages differ greatly across different marine and coastal areas. More precise user charges may be developed for different land uses and for different locations with different natural and socioeconomic conditions through a zoning scheme. At the same time, regulations must be introduced to protect the crucial habitats and ecosystems, as user change alone is unlikely to achieve relevant policy objectives. Acknowledgements We would like to express our appreciation to Dr. Di Jin of the Woods Hole Oceanographic Institution and Prof. Luoping Zhang of Xiamen University for beneficial discussions regarding various aspects of this study. The study was funded by the National Natural Science Foundation of China (#70771098) and Xiamen Science and Technology Bureau (#04389).
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