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http://dx.doi.org/10.7837/kosomes.2014.20.2.130

Economic Feasibility Analysis of Marine Ecosystem Restoration Technology Program  

Kwon, Young-Ju (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology)
Paik, Sang-Kyu (Marine Policy Development Office, Korea Institute of Marine Science & Technology Promotion)
Yoo, Seung-Hoon (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology)
Publication Information
Journal of the Korean Society of Marine Environment & Safety / v.20, no.2, 2014 , pp. 130-142 More about this Journal
Abstract
The Korean government is considering implementation of the marine ecosystem restoration technology program (MERTP) to analyze the current status of the marine ecosystems and causes for the ecosystem deterioration as well as to eventually establish a master strategic plan for restoring ecosystem functions and preventing ecosystem functional loss. In order to determine likelihood of successful implementation, it is essential to perform an analysis of the economic feasibility of the program. The present study assessed economic feasibility of the MERTP. To this end, the dichotomous choice contingent valuation (CV) method is used. In particular, dichotomous choice (DC) format is employed as a method of eliciting willingness-to-pay (WTP) response to incentive-compatible mechanisms. The study also employed the spike model to deal with zero WTP responses from the DC CV survey. This survey of 1,000 randomly selected households in accordance with the guidelines provided by the National Oceanic and Atmospheric Administration (USA) was carried out nationwide in 2013. And, the respondents were asked in person-to-person interviews about their WTP for implementing the MERTP. The results showed that the annual mean WTP was estimated to be 5,414 won per household. Consequently, the annual benefit from the MERTP would be about 98.6 billion won for the next five years. Economic feasibility assessment utilizing the MERTP investment cost and expansion cost of the value provided that net present value, benefit/cost ratio, and internal rate of return are 337.8 billion won, 5.20, and 65.9 %, respectively, which are bigger than 0, 1.0, and 5.5 %, and that the MERTP passes the cost-benefit analysis.
Keywords
Marine ecosystem restoration technology program; Economic feasibility; Contingent valuation method; Willingness to pay; Cost-benefit analysis;
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