Social Impact Assessment of the Limestone Mining Industries in Local Communities of Korea Daejin University Shin, Young Chul The 27 th Annual Conference International Association for Impact Assessment 6-9 June 2007, COEX Convention Center, Seoul, Korea

2 Contents ☜ Introduction ☜ Survey Method Opinions about Strip Mining Estimation of Damage Cost WTP for Suggested Policies Conclusion

3 Introduction Purpose To reveal opinions about limestone mining(strip mining) To quantify experiences of damage and damage cost Use questionnaire survey method Include non-use value as well as use value of natural resources

4 Introduction Fig. Strip mining of limestone in Korea

5 Introduction Limestone Mining in Kangwon Do 92% of total limestone reserves Over 95% of total cement product

6 Introduction Deforestation size due to limestone mining in Korea = 1,976 ha Deforestation size of 3 cities (Donghae, Samcheok, Yeongwol) in Kangwon do = 1,274 ha (64.5% of total)

7 Introduction Damage types of limestone mining and cement industries Deforestation due to strip mining Health effects(mortality and morbidity) due to air pollution materials Increases of disamenity and averting behavior cost Damages of noise and shaking Other damages

8 Contents Introduction ☜ Survey Method ☜ Opinions about Strip Mining Estimation of Damage Cost WTP for Suggested Policies Conclusion

9 Survey Method Survey #1: Inhabitants survey in limestone mining area Population: Donghae city, Samcheok city, and Yeongwol gun in Kangwon Do Sample size: 991 households Survey method: person-to person interview Principal questions: opinions about experience of damage due to limestone mining, minimum compensation

10 Survey Method Survey #2: Nationwide CVM(contingent valuation method) survey Population: entire national households Sample size: 1,000 households Survey method: internet survey Principal questions: opinions about limestone mining, willingness-to-pay(welfare measure) for suggested policies

11 Survey Method Contingent Valuation Method(CVM) Economic Valuation Method of Non-maketed goods Stated preference method( cf. revealed preference method, benefit transfer) Direct questionnaire approach of asking a sample of individuals to state their maximum WTP for preserving an environmental asset or suggested policies

12 Contents Introduction Survey Method ☜ Opinions about Strip Mining ☜ Estimation of Damage Cost WTP for Suggested Policies Conclusion

13 Opinions about Limestone Mining Contribution or Damage of Limestone Mining to Local Communities

14 Opinions about Limestone Mining Damage Severity due to Limestone Mining

15 Opinions about Limestone Mining Most Serious Damage to Inhabitants

16 Opinions about Limestone Mining Minimum Compensation per Household

17 Contents Introduction Survey Method Opinions about Strip Mining ☜ Damage Cost Estimation ☜ WTP for Suggested Policies Conclusion

18 Damage Cost Estimation Deforestation with Mt. destruction CVM to include use value & non-use value: 16,421 (10 thousand won)/ha Total: 26,364 million won Health effect1: cost of premature mortality Benefit transfer: VSL(value of a statistical life) = 142,210 (10 thousand won) Total: 3,857 million won

19 Damage Cost Estimation Health effect2: cost of illness Unit costs of illnesses from inhabitants survey Total: 4,289 million won Cost of damages except health effects due to air pollution Averting behavior cost, clearing cost, outdoor activity restriction, disamenity: inhabitants survey & benefit transfer Total: 13,840 million won

20 Damage Cost Estimation Cost of noise and shaking Benefit transfer: unit value of dB = 67,400 won Total: 257 million won Cost of other Damages Unit costs from inhabitants survey Total: 935 million won

21 Damage Cost Estimation Estimated Damage Costs per Year: 51,542M

22 Contents Introduction Survey Method Opinions about Strip Mining Estimation of Damage Cost ☜ WTPs for Suggested Policies ☜ Conclusion

23 WTPs for Suggested Policies Suggested Policies of CVM Purchase the forest areas which have high value of preservation Support systematic ecological restoration Support alternative industrial development as a kind of restoration Support damage mitigation and compensation

24 WTPs for Suggested Policies WTP Model for CV data Random utility model (RUM) Indirect utility function v(y, Z, q, ε) v(y, Z, q1, ε) > v(y, Z, q0, ε) V(y, Z, q1, ε) = v(y+CS, Z, q0, ε) WTP =CS =CS(y, Z, q0, q1, ε) = X ’ β+ ε

25 WTPs for Suggested Policies Estimation method of WTP model

26 WTPs for Suggested Policies Allocation Ratios of WTP for Suggested Policies

27 WTPs for Suggested Policies WTP per year for suggested policies: 79,549M

28 Contents Introduction Survey Method Opinions about Strip Mining Estimation of Damage Cost WTP for Suggested Policies ☜ Conclusion ☜

29 Conclusion Questionnaire Survey Method: useful to assess social impact Reveal opinions about specific issues Estimate damage costs of a region using benefit transfer Estimate WTPs for suggested policies or preserving natural asset using CVM benefit cost analysis of specific issues

30 Conclusion Benefit Cost Analysis Total damage cost of limestone mining in 3 cities = 51,542 million won per year WTP for suggested policies = 79,549 million won per year Implementing the suggested policies is needed to improve national welfare

Thank you !