Economic Evaluation Studies of the Chengnan Reservoir Project in Linqing
|Keywords||reservoir constructional projects economic evaluation|
Economic evaluation of projects is financing decisions and investment decisions based primarily. It is also the basis for government investment projects approval and business investment project approval. With the publish of the 2011 Central Document No.1, water as the country’s critical infrastructure and basic industries leads to increasing attention of all the different levels of government. As the investment of a variety of channels increases, water conservancy investment system as the China’s market economy has generated a fundamental change from a single investment by the state towards investment diversification. The most concerned issue of the government or private capital investors is the feasibility of the project and the pursuit of maximum capital profit. Therefore, in order to provide a more accurate and reasonable reflection of investment expectations, the economic evaluation of water projects is very important to study the feasibility of the building water conservancy project.Chengnan reservoir located in Linqing, as a county-level city of in northwest Shandong Province, is an important gateway for Shandong, Shanxi and Hebei Provinces. The construction of the Chengnan reservoir is an important water conservancy project to solve the water shortage of Linqing and improve water conditions. It thus protects the local urban and rural drinking water safety and promotes local economic development. Through the construction of flood storage project, Chengnan reservoir takes full advantage of the Yellow River to provide water supply for Linqing City and nearby rural, and improve the living water level of assurance. It also plays an important role for solving the inadequate water supply, environmental degradation and poor water quality of the groundwater sources.On the basis of the water balance analysis, project management and engineering estimates of the Chengnan reservoir, this paper firstly presents economic evaluation by calculating the project cost and project benefits using the theory of economic evaluation of research results. Three indicators of the overall economic analysis including the economic internal rate of return, economic costs ratio and net present valueare adopted to demonstrate the effectiveness and feasibility of this project. Then, the evaluations of the sensitivity analysis are performed in two cases in terms of setting 10% increase in costs and reducing 10% in benefits. Finally, by calculating the cost of the project costs and the water amount of the Chengnan reservoir, water analysis and loan capacity are analyzed. Several financial indicators, such as project financial internal rate of return, payback period, the economic net present value, internal rate of return of capital, etc. are used to validate the profitability of this project. In this paper, the economic evaluation of multi-dimensional approach is utilized on the basis of not only the costs and benefits, but also the interaction of engineering, regions, basin, national social and economic development. Furthermore, economic evaluations are carried out in combination with the water supply and demand balance analysis, management and budget analysis, which extends the economic evaluation of the Chengnan reservoir, thus provides an important basis for the feasibility study of the Chengnan reservoir.