A manganese ore dump and oil tank farm have been situated in the Port Elizabeth harbour for more than forty years. Although these facilities are independently operated and managed, they are viewed as one distinct disamenity, and there is strong local opposition to their continued location in the harbour. The negative environmental impacts (for example, water and air pollution) caused by the ore dump and tank farm have been well documented. This pollution takes the form of oil leaks from the oil tank farm, and ore dust pollution from the manganese ore dump. The air pollution caused by the manganese ore dump is a result of the dump currently being an open air handling and storage facility. The ore dust is dispersed into the air due to strong prevailing winds in the Bay and has resulted in respiratory illnesses of residents living in close proximity to the facility. Oil pollution, due to leakages experienced at the oil tank farm, has extended far beyond the periphery of the harbour. Inter alia, there has been a decline in local fish populations, as well as a decline in passive and active use satisfaction associated with the adjacent beach area, i.e. Kings Beach. These oil leakages, first reported in 2001, could have a detrimental effect on the Blue Flag status of this beach, as well as the Blue Flag status of other beaches situated further up the coast. The lease agreements for the oil tank farm and manganese ore dump are set to expire in 2014 and 2016, respectively. As yet, there is no consensus on when these disamenities will be (re)moved. In order to mitigate the secondary impacts of these facilities, both of them should be removed. Although these impacts should be the focus of public policy debates and cost-benefit assessments, no direct valuation method exists to value the economic cost to affected communities. Instead, non-market valuation methods, such as the contingent valuation method (CVM), are often applied to assign values to these economic costs. This study seeks to determine Nelson Mandela Bay households‟ preferences for the immediate removal of the manganese ore dump and oil tank farm from the Port Elizabeth harbour. This case was selected since it represents a current public policy debate issue that has not been resolved. Monetary estimates of people‟s preferences for the removal of pollution-creating activities can assist policy-makers and other stakeholders when locating industries in an urban setting. These estimates can also be of use in understanding the benefits associated with air and water quality improvement projects. The primary valuation technique used in this study is the CVM. This method was chosen as it is capable of measuring the economic significance of lost passive-use values of individuals affected by negative externalities. Both a non-parametric and a parametric estimate of mean willingness-to-pay (WTP) were derived. On average, a respondent was willing to pay a once-off amount of between R47.09 (non-parametric estimate) and R93.21 (parametric estimate). Non-parametric estimation (via the Turnbull estimator) was conducted to test the sensitivity of the parametric results (via a logit model). The logit model‟s results showed that the probability of a „yes‟ answer to the referendum question varies with a number of covariates in a realistic and expected way, which offers some support for the construct validity of this CV study. Household income, education, age, and disamenity awareness were significant determinants of individuals‟ responses to the WTP question. A summary of the findings of WTP estimates for both parametric and non-parametric analysis is provided in Table 1. Three primary recommendations stem from this study. Firstly, the study used a relatively small sample size. Although it was sufficient for a pilot study it is recommended that future research into this issue should aim for a much larger sample size to ensure more precise estimates of the WTP for the removal of the disamenity. Secondly, the conservative non-parametric mean WTP estimate should be used as opposed to the higher parametric mean WTP estimate. Third, the aggregate WTP estimation constitutes only a partial analysis of cost. A number of other factors and value streams need to be analysed and compared with the cost estimates generated by this study if adequate holistic decision-making is to take place with regard to the removal of the manganese ore dump and oil tank farm. More specifically, the total WTP estimated in this study should be viewed as only one input into a comprehensive social cost-benefit analysis to determine the desirability of the removal of this disamenity for wider society.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:nmmu/vital:9010 |
| Date | January 2012 |
| Creators | Cloete, Le Ann |
| Publisher | Nelson Mandela Metropolitan University, Faculty of Business and Economic Sciences |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis, Masters, MCom |
| Format | x, 89 leaves, pdf |
| Rights | Nelson Mandela Metropolitan University |
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