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2021-01-18 GC - Item 3 - Attachment 3 - Cost Benefit Analysis for Coastal Erosion Options
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General Committee Agenda
18 January 2021
Attachment 3 to Item 3
Noosa Shire Council – Coastal
Hazard Adaptation Plan
Cost benefit analysis
Final Report prepared for Noosa Shire Council
Thursday 2 April 2020
© Aither 2020
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Full text of the other 35 sections
Section 2
Section 3
Contents
Executive Summary .................................................................................................................... 3
1. Introduction ............................................................................................................................. 5
1.1. Background ........................................................................................................... 5
1.2. Approach ............................................................................................................... 5
1.3. Structure of this report ........................................................................................... 6
2. Expected coastal erosion impacts and project options ........................................... 7
2.1. Coastal erosion impacts ......................................................................................... 7
2.2. Project options ....................................................................................................... 8
3. Cost benefit analysis conceptual model ...................................................................... 10
3.1. Overview of CBA ..................................................................................................10
3.2. Conceptual CBA model .........................................................................................10
4. Description of costs and benefits ................................................................................... 12
4.1. Costs ....................................................................................................................12
4.2. Benefits ................................................................................................................13
5. Results and findings............................................................................................................ 16
5.1. Results .................................................................................................................16
5.2. Sensitivities ..........................................................................................................23
5.3. Summary ..............................................................................................................24
Appendix A: Physical impact assessment (BMT, 2020) .............................................. 25
Appendix B: Assumptions and data .................................................................................... 26
Appendix C: Sensitivity Analysis .......................................................................................... 30
References .................................................................................................................................... 32
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Tables
Table 1 Summary of coastal adaptation options evaluated.................................................... 8
Table 2 Costs of management activities ............................................................................. 12
Table 3 Summary results – NPV, discount rate of 2.3%, present values calculated for the
period 2020-2100 .................................................................................................. 16
Table 4 Eastern Beaches - Present Values ($m relative to base case) ................................ 21
Table 5 Teewah - Present Value ($m relative to base case) ............................................... 22
Table 6 Sensitivities ........................................................................................................... 23
Figures
Figure 1 Indicative steps of CBA .......................................................................................... 10
Figure 2 Conceptual CBA model.......................................................................................... 11
Figure 3 Example of effects of property acquisition .............................................................. 19
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Executive Summary
Climate change is leading to sea-level rise and an increase in the frequency of coastal erosion events
relative to the present day. Coastal erosion and shoreline recession pose a significant risk to the
social, economic and environmental values present along Noosa Shire Council’s (Council) coastline.
Typical options available to maintain these values include seawalls, revegetation, and beach
nourishment, as well as early warning disaster systems and land use planning.
Aither was engaged by Council to undertake a socio-economic analysis of potential adaptation
options at two locations; Eastern Beaches which includes Peregian, Marcus, Castaways, Sunrise and
Sunshine Beach suburbs, and Teewah. At this stage of investigation, the socio-economic analysis
aims to:
• support Council’s understanding of the merit of different options
• assist Council to communicate the benefits and costs of options to stakeholders
• determine if more detailed investigation is required.
The socio-economic analysis investigated the effects of coastal erosion between 2020 and 2100. In
accordance with modelling completed by BMT (BMT, 2020), coastal erosion moves progressively
landwards at the Eastern Beaches and Teewah, as sea levels rise. The risk to assets at these
locations progressively increases if no management activities are undertaken, with the scale and
speed of increases differing across the coastline due to factors specific to each location. Aither’s
analysis assessed the following adaptation options:
• Option 1 (Base case): no adaptation actions undertaken
• Option 2: Dune revegetation and management
• Option 3: Dune revegetation, augmentation and management
• Option 4: Construction of seawalls in high risk locations
• Option 5: Acquisition of all properties followed by rezoning of land to public open space that
supports natural coastal processes
• Option 6: Option 5 with a 15-year leaseback of properties prior to conversion to public open
spaces
• Option 7: Changes to planning provisions to prevent development within the projected 2070
coastal erosion prone area.
The analysis demonstrates that option 3 provides the greatest economic net present benefit for
managing erosion risks along the Eastern Beaches (Table E1). The benefits of this option are driven
by the significant value provided by the continued natural protection of high value beachfront
properties. Investigation into the full costs and risks of undertaking option 3 should therefore be a
priority for Noosa Council.
Option 7 also delivers net economic benefits, although the net benefits are lower than under option 3.
Implementing planning restrictions such as those in option 7, alongside dune augmentation in viable
locations is likely to deliver socio-economic benefits to the community and reduce risks. Further
investigation into the full costs of dune augmentation and detailed land use planning provisions should
therefore be undertaken.
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Options 5 and 6 are the most economically viable for Teewah, however an investigation into the local
value of public open space should be undertaken to ensure that the benefits of creating new public
open spaces has not been overestimated.
Table E1 Summary results – Net Present Value (NPV), discount rate of 2.3%, costs and
benefits assessed for period 2020-2100
Options
Location Option 2 Option 3 Option 4 Option 5 Option 6 Option 7
Eastern $63m $239m -$2773m -$222m -$70m $73m
Beaches
NPV
Teewah $0.3m -$17m -$67m $16m $9m n/a
NPV
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1. Introduction
1.1. Background
Climate change is leading to sea-level rise and an increase in the frequency of coastal erosion events
relative to the present day. Coastal erosion and shoreline recession pose a significant risk to the
social, economic and environmental values present along Noosa Shire Council’s (Council) coastline.
As part of the QCoast2100 program, Council has begun developing a Coastal Hazard Adaptation
Plan (CHAP). The CHAP includes an assessment of appropriate adaptation options to maintain the
significant tangible and intangible coastal zone assets in the Local Government Area, and the
associated benefits and costs to the local community. Typical options available to protect these
values include seawalls, revegetation, beach nourishment, as well as early warning disaster systems
and land use planning. As part of the CHAP, technical investigations into potential adaptation options
have been undertaken by coastal engineers (BMT), including high-level cost estimates. These options
consider a range of measures in isolation and combination, including both hard protection (e.g.
seawall) and soft protection (e.g. beach nourishment activities).
Aither was engaged by Council to undertake a socio-economic analysis of the shortlisted adaptation
options developed by BMT. This report outlines the approach and results of the socio-economic
appraisal of adaptation options at two locations; Eastern Beaches which includes Peregian, Marcus,
Castaways, Sunrise and Sunshine Beach suburbs, and Teewah. The focus of this stage of the project
was to undertake a cost-benefit analysis (CBA) of a set of technically feasible coastal adaptation
options based on the findings of a prior multi-criteria analysis of options. At this stage of investigation,
the intent of the socio-economic analysis is to:
• support Council’s understanding of the merit of different options
• assist Council to communicate the benefits and costs of options to stakeholders
• determine if more detailed investigation is required.
This report provides findings for Phase 7 of the CHAP: Socio-economic appraisal of adaptation
options of the Noosa CHAP in line with the QCoast2100 CHAP minimum standards and guidelines.
1.2. Approach
The socio-economic analysis is based on industry best practice and uses a cost benefit analysis
approach. It follows the QCoast2100 minimum standards (QCoast2100,2016) and Queensland
Treasury Project Assessment Framework (PAF) (Queensland Treasury, 2015). Aither’s approach
specifically included:
• discussing the coastal adaptation options with Council
• identifying, with Council and BMT, the costs and benefits expected to result from the different
adaptation options
• undertaking a data gathering exercise including desktop review, and consultation with key
stakeholders to ensure best available evidence was used
• quantifying the costs and benefits and developing a CBA model
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• undertaking quality assurance on all modelling and outputs to ensure results are robust and meet
best practice guidance.
1.3. Structure of this report
This report is broadly structured in two parts:
• the main report, which concisely describes the approach and findings
• a technical appendix, which provides details about the method, values and assumptions
underpinning the CBA.
The subsequent sections of the main report address the following:
• Section 2 outlines the forecast coastal erosion, associated impacts and project options
• Section 3 introduces the concept of CBA, and provides a conceptual CBA model for the project as
a basis for identifying the costs and benefits
• Section 4 describes the costs and benefits identified
• Section 5 provides the results and findings.
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2. Expected coastal erosion impacts and
project options
2.1. Coastal erosion impacts
The socio-economic analysis has investigated the effects of coastal erosion over the period 2020 to
2100. Modelling undertaken in Phase 3 of the CHAP shows that coastal erosion events will encroach
progressively landwards as sea levels rise (relative to present day extents) at the Eastern Beaches
and Teewah. If no management activities are undertaken, the risk to assets at these locations
progressively increases, though not uniformly due to differences at the local scale. Estimated effects
are based on geo-spatial analysis of the erosion prone area. These effects have previously been
assessed at nominal timeframes of 2020, 2040, 2070 and 2100 selected to align with increases in sea
level of 0m, 0.2m, 0.4m and 0.8m respectively. The key identified effects of coastal erosion are
damage to public and private assets and to the beach itself (i.e. vegetated and un-vegetated dunes).
A range of potential options for managing these impacts have been developed and are tested through
this analysis. These options are set out in Section 2.2.
2.1.1. Impacts to public and private assets
Under the base case there are a number of private properties at both locations that will potentially be
affected as a result of coastal erosion. For the purposes of this study, properties considered likely to
be affected are those where a portion of the current main building falls within the coastal erosion
prone area in a specified time period.
In addition to private assets, a large number of publicly owned assets are likely to be affected by
coastal erosion in future. These include roads and parking areas, stormwater drainage and sewerage
networks, beach accesses, energy systems, streetlighting, parklands/greenspace and surf lifesaving
clubs.
2.1.2. Impacts on beach width
The overall beach width in any given year is a function of a range of factors. These include offshore
and inshore sand supply, erosion events, and natural accretion processes, as well as human factors
such as active beach nourishment and the existence of any hard structures (e.g. seawalls or
groynes). Under the base case of ‘do nothing’, the beach and frontal dune is expected to migrate
landwards as sea levels rise, infringing on existing land-uses (residential and other). Where no hard
protection is constructed the beach is assumed to move landwards with the lower beach width
remaining consistent with its present-day width. However, the width of the vegetated dune zone may
decrease leading to a potential loss of environmental and aesthetic values.
Where a seawall is constructed, over time the beach seaward of the wall is expected to erode up to
the base of the wall. This erosion will occur on a permanent or semi-permanent basis, thereby
reducing the sustainable beach width. This will cause reductions in recreational, environmental and
aesthetic values due to the loss of beach, presence of exposed wall, and effects on existing
ecological processes.
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2.2. Project options
A range of coastal adaptation options were developed through earlier stages of the CHAP in
consultation with the local community. The full range of potential options were examined through a
multi-criteria analysis (MCA) undertaken by BMT. Those that scored highest in this process, or were
considered to likely be of broader interest, were included in the CBA. This process has resulted in
seven main options (including the base case) for inclusion in the CBA.
The options analysed in this report are broadly described in Table 1 and vary based on the landward
assets they protect and future beach width they provide or influence. The options are compared with a
base case that assumes no coastal adaptation or risk mitigation efforts are undertaken. The CBA
assesses the net change in the costs and benefits of each option relative to this base case. Not all
options are undertaken immediately, but from the point in time needed to avoid the effects of coastal
erosion. We did not undertake any additional analysis around timing of impacts and investments.
There is limited data on different timings for coastal erosion impacts given changes in investments.
Table 1 Summary of coastal adaptation options evaluated
Option Description
Option 1 (base Do nothing approach. No risk mitigation efforts undertaken between present
case) day and 2100.
Dune revegetation and management undertaken every 5 years, from 2020
Option 2
until 2100.
Dune augmentation, revegetation and management undertaken every 5 years,
Option 3
from 2020 until 2100.
Armoured rock revetment for all beach compartments identified as High or
Option 4 Very High risk by 2100 (Sunrise and Sunshine beaches only). Constructed in
2040.
Acquisition of all properties followed by rezoning of land to public open space
that supports natural coastal processes1. Acquisition to occur 30 years prior to
Option 5
identified erosion impact. Conversion of acquired lots into public recreation
areas.
Acquisition of all properties where lot size does not support sufficient building
size and setback due to coastal erosion. Acquisition to occur 30 years prior to
Option 6 identified erosion impact. Leaseback of buildings for 15 years after acquisition.
Conversion of acquired lots into public recreation areas when lease period
ends.
Changes to planning provisions to prevent development within the projected
2070 coastal erosion prone area. Dune revegetation and management over a
Option 7
5-year life. Undertaken until 2100. This option is only assessed for the Eastern
Beaches and not for Teewah.
Source: Noosa Shire Council and BMT
Options 2 and 3 are undertaken until 2100 regardless of any reduction in their effectiveness in the
intervening years. This is done so that all options are being compared on an equal temporal basis. It
also assists decision makers understanding when, if implemented, these options are no longer
1
Assuming a minimum building size of 180m 2 and the required 6m frontal boundary setback and 2m side boundary
setback
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feasible. An overview of the expected physical effects of each of these adaptation options produced by BMT (2020) is provided in Appendix A. AITHER | Final Report 9 Noosa Shire Council – Coastal Hazard Adaptation Plan
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3. Cost benefit analysis conceptual model
3.1. Overview of CBA
Cost benefit analysis (CBA) is the most common form of economic evaluation used to inform the merit
of a proposed investment, whether for public or private projects. When done well, CBA makes the
implications of decisions clear and transparent. Its advantage as an analytical tool includes the
following features:
• costs and benefits are expressed in monetary terms and hence are directly comparable
• discounted cash flow analysis is used to calculate results in ‘present value’ terms, enabling direct
comparison of projects with costs and benefits that vary over time
• costs and benefits are considered from the perspective of the community, rather than any
particular individual or interest group.
In principle, economic CBA includes all costs and benefits to the community. It incorporates the value
that people place on all financial, social and environmental outcomes. The six basic steps in CBA are
shown in Figure 1. The analysis undertaken for this project follows the approach set out in the
Queensland Governments Project Assessment Framework (PAF) (Queensland Treasury, 2015).
The key decision-metric output of CBA is the Net Present Value (NPV), which measures the present
value of net benefits. It is calculated as the present value of all benefits minus the present value of all
capital and recurrent costs within the appraisal period for the project.
Figure 1 Indicative steps of CBA
3.2. Conceptual CBA model
Aither developed a conceptual model of the potential costs and benefits of coastal hazard adaptation
options, in consultation with Council (Figure 2).
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The conceptual model identifies the expected outcomes, benefits and costs of coastal hazard adaptation. It shows the causal link between the proposed action, the expected outcomes and the costs and benefits. The conceptual model captures a wide range of potential benefits, some of which are more readily quantifiable than others. The costs and benefits are described in the subsequent sections, and the approach to their quantification – including input values and assumptions – are detailed in the Appendix B. Figure 2 Conceptual CBA model AITHER | Final Report 11 Noosa Shire Council – Coastal Hazard Adaptation Plan
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4. Description of costs and benefits
The costs and benefits for each project option have been identified through consultation with Council
and BMT. The costs of coastal protection measures have been provided by BMT as part of their
technical assessment of the coastal adaptation options. The values used to quantify the benefits have
been carefully selected using both desktop review of the literature and stakeholder consultation.
Aither’s extensive experience in economic analysis and coastal adaptation has been used to assess
the reliability and relevance of data, in particular where data specific to the Noosa region is not
available. The majority of values used are either directly taken from data relating to Noosa Local
Government Area (LGA) (for example data provided by Noosa Council and tourism data) or to other
locations in Queensland or New South Wales that share similar characteristics (for example
recreational beach use).
All data and assumptions used in the analysis have been provided in Appendix B.
4.1. Costs
The management costs included in the CBA are set out in Table 2. These costs have been provided
by BMT and include high-level assessments of the potential costs of undertaking relevant coastal
adaptation management activities. The administrative costs of planning changes or acquisitions have
not been included in the analysis at this point due to limited data.
Table 2 Costs of management activities
Type Description Value Source
Revegetation and maintenance over a
Dune management 5-year life including weed and vermin $1100/ha BMT
control and monitoring
Sand supply and placement, all
beaches using offshore sand source.
Dune augmentation Assumes placing on beach and using $63/m3 BMT
conventional earthmoving equipment
to shape beach and dunes.
Costs include design and construction $15,000/m upfront and
Seawall BMT
for rubble mound structure. $40/m/year ongoing
As well as the management costs associated with physical (i.e. on-ground) works, for each coastal
hazard adaptation option shown in Table 2, there are ongoing costs to property owners in relation to
the maintenance and redevelopment of their properties. These costs are incurred under the base
case but change under the different options, and therefore need to be included in the analysis.
Redevelopment costs were estimated based on building approvals data provided by Noosa Council,
and an assumed rebuild interval of 20 years.
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4.2. Benefits The benefits assessed through the CBA are described here and include benefits associated with a range of tangible and intangible assets including: • property protection • public asset protection • recreational use • tourism • non-use values (i.e. relating purely to the existence of the natural environment) • amenity. Under different options these identified benefits may increase or decrease relative to the base case. Where benefits decrease, for example where there is loss of beach width leading to reduced recreational use, the value will be negative. All data and assumptions used in the analysis have been provided in Appendix B. 4.2.1. Property benefits The property benefits included in this analysis are based on the physical protection of private properties that are under threat from coastal erosion processes. The types of properties which have been identified and valued through this CBA include: • residential properties • commercial properties • vacant land. These benefits are not just the static market value of these properties, but the benefit received from being able to live in or run businesses from these beachfront properties over time. The assumed annual benefits for protecting each property are calculated using the current property value and estimated redevelopment costs. Property values are derived from historical sales data for each identified at risk property. Where this specific data is not available an average value, based on the value of other beach front properties in the same suburb, has been used. The identified property benefits accrue to the owners of a property, with negligible benefits flowing to the broader public. 4.2.2. Public asset protection benefits There are benefits associated with protection of public assets that are under threat from coastal erosion processes. The benefits from protection of these assets are assumed to accrue equally to all citizens within the Council region. The key assets which have been identified and valued through this CBA include: • roads • surf clubs • other public assets including stormwater and sewerage networks, and life-saving services. AITHER | Final Report 13 Noosa Shire Council – Coastal Hazard Adaptation Plan
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Public asset values were provided by Council’s finance branch. The benefits of protecting these assets are quantified using value of these assets and the year in which they would be affected by coastal erosion. 4.2.3. Recreational use benefits Beach users receive recreational benefits from undertaking activities on the beach. These benefits are calculated based on annual beach visitation and the average value per recreational use taken from studies by Raybould et al. (2011) and Blackwell (2007). The number of people visiting the beach, and the value they place on visitation, are influenced by the width of the beach, with a narrower beach negatively affecting visitation and benefit per visit. These benefits are calculated separately for locals and tourists. For this analysis these benefits are only relevant under option 4, which is the only option assumed to change the profile of the beach. As this option effectively leads to a permanent loss of beach width and therefore a permanent loss of recreational value, these values are included in the analysis as a loss, rather than a benefit. Other options allow for a beach to recover gradually under natural coastal processes (i.e. sand accretion and vegetation regrowth). The losses from recreational use accrue to all recreational users of the beach. 4.2.4. Tourism benefits Tourism associated with beach visitation, is a key benefit to the region. Tourism benefits are based on: • beach recreational use by tourists • the proportion of tourists who would not visit the region without the beach • the average expenditure per tourist • the average benefit per dollar of expenditure to the local community. For this analysis these benefits are only relevant under option 4, which is the only option assumed to change the profile of the beach. Under all other options the beach width is assumed to be unaffected, and therefore the tourism benefits are the same as under the base case, with no net benefits or losses. As option 4 leads to a loss of beach width and therefore a loss of tourism these values will be included in the analysis as a loss, rather than a benefit. These losses accrue mainly to the local community who would otherwise receive profits from tourism expenditure. 4.2.5. Non-use benefits As well as providing individuals with benefits from recreational use, the beaches are also likely to have significant non-use, or existence, values for the local community. Non-use benefits are based on the value people assign to goods (including public goods) even if they never have and never will use them. Non-use values can include ecological values which are valued purely for their own existence. These non-use values for beaches can be related to the potential for use by future generations or by other people, or simply valuing that the beach exists regardless of use. These benefits are quantified based on the number of local households and the average non-use value per household. For this analysis the local population includes: • Noosa LGA • Gympie LGA • Sunshine Coast LGA AITHER | Final Report 14 Noosa Shire Council – Coastal Hazard Adaptation Plan
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• Moreton Bay LGA • Cherbourg LGA. For this analysis these non-use values are only relevant under option 4, which is the only option assumed to change the profile of the beach. As this option leads to a loss of beach width and therefore a loss of non-use values, these values will be included in the analysis as a loss, rather than a benefit. These losses accrue equally across the local community identified above. 4.2.6. Amenity benefits Publicly accessible open space provides amenity benefits to the local community. Amenity benefits can include both tangible benefits such as recreation, or non-tangible benefits such as pleasure or aesthetic appreciation. Under option 5, the amenity benefits resulting from the conversion of private lots to public open space have been quantified. These have been quantified based on average household willingness to pay for additional public open space (Ambrey and Fleming, 2014) for all households in the local area. These benefits are expected to accrue equally across the local community. AITHER | Final Report 15 Noosa Shire Council – Coastal Hazard Adaptation Plan
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5. Results and findings
5.1. Results
The CBA results are provided for Eastern Beaches and Teewah in the following tables:
• Table 3 provides headline net present value results for each option at the Eastern Beaches and
Teewah locations. The results show the net present value of the benefits today, accounting for all
benefits and costs over the period 2020-2100.
• Table 4 and Table 5 provide the costs of each option relative to the base case which
demonstrates which project options are preferable from an economic perspective.
Results are provided in present value terms, with an assumed real discount rate of 2.3 per cent. The
discount rate is based on Council’s cost of borrowing. This assumption has been tested through the
sensitivity analysis (Appendix C).
Table 3 Summary results – NPV, discount rate of 2.3%, present values calculated for the
period 2020-2100
Options
Location Option 2 Option 3 Option 4 Option 5 Option 6 Option 7
Eastern $63m $239m -$2773m -$222m -$70m $73m
Beaches
NPV
Teewah $0.3m -$17m -$67m $16m $9m n/a
NPV
5.1.1. Option 2 - Dune revegetation and management
Under option 2 dune revegetation and management is undertaken every 5 years until 2100. In
locations where erosion is not already too far advanced dune management can help to delay damage
to properties and assets. Advice from BMT notes that in some areas dune management can help
delay damage to 12 properties for 30 years.
Under this option there is a positive NPV of $63m at the Eastern Beaches and $0.3m at Teewah.
However, it should be noted that the positive NPV is associated with very low costs of action, rather
than the delivery of significant benefits. For example, there is only a 7 per cent increase in property
benefits over the baseline. Dune management is a low cost, low risk management option which does
provide benefits from delaying damage to properties and assets. It can also delay erosion so other,
more substantive, options can be investigated. Given the high value of these properties and the low
costs, dune management could be considered a ‘no regrets’ action and thus worth undertaking in the
short term.
5.1.2. Option 3 - Dune revegetation, augmentation and management
Option 3 includes both dune management and revegetation and dune augmentation. Dune
augmentation requires a supply of additional sand to be added to the beach, with the use of
earthmoving equipment to shape the beach and dunes.
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Option 3 is the most feasible option for the Eastern Beaches, with an NPV of $239 million. Under
option 3, property benefits and asset benefits are 50 per cent higher than under the base case. Given
the high value of properties in this location the increase in benefits over the base case is significant.
However, this option is not economically viable for Teewah due to the high implementation costs
relative to the small number of properties affected by coastal erosion prior to 2100.
The costs associated with undertaking dune augmentation ($220 million) are significant. There is also
a high level of uncertainty around these costs due to the limited information available on reliable
sediment supply and full implementation costs. However, the benefits can be significant, materially
reducing the likelihood of damage to about 48 properties at the Eastern Beaches up to 2100.
Investigation by Council of this option for the Eastern Beaches would be justified to increase
confidence in sand availability and estimated costs. Investigation into a more targeted approach to
dune augmentation at a smaller scale would also have merit, as reducing the costs while still
delivering the most effective protection may make this option more economically viable.
The direct beneficiaries of dune augmentation comprise a relatively small number of landholders.
Therefore, it is recommended that Council should consider of the equity implications of this option
prior to funding the protection of a relatively small number of properties. The broader rate-paying base
may anticipate rates to increase or services to decrease given the significant investment in this option,
from which they receive no benefit. Cost recovery for dune augmentation from affected landholders
should therefore be considered if this option is to be pursued.
5.1.3. Option 4 - Construction of seawalls in high risk locations
Under option 4 armoured rock revetments (seawalls) are built for all beach compartments identified as
High or Very High risk by 2100. The seawall protects a small number (relative to the whole LGA) of
properties and public assets from damage indefinitely. However, the seawall causes erosion of the
beach seaward of the structure thereby negatively affecting recreation, tourism and non-use values
(including ecological and natural coastal processes) associated with the beach.
This option performs particularly poorly with NPVs of -$2.773 billion (Eastern Beaches) and -$67
million (Teewah). Property and asset benefits are the same as under option 32, and the total
implementation costs are lower at $55 million compared to $220 million for dune augmentation at the
Eastern Beaches (although there is likely to be cost uncertainty from access to feasible rock supplies
and construction costs and time). However, there is a 60 per cent loss in recreational benefits, a 14
per cent loss in tourism expenditure and a 44 per cent loss in non-use benefits which significantly
outweigh the value of the private properties and public assets being protected. This analysis has not
included any assumptions around interruptions to beach use and adjacent properties during
construction which may increase the costs of this option.
This option is therefore considered unviable from a socio-economic perspective within this timeframe.
There may however be some benefits from very highly targeted seawall protection of specific
properties or assets in locations which are not suitable for dune augmentation or dune management.
2
This assumes that dune augmentation continues to be effective until 2100, which depends on available sand supply as
well as continued funding for undertaking augmentation. Building a seawall may provide greater certainty
compared to dune augmentation.
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5.1.4. Options 5 and 6 - Acquisition of all properties followed by rezoning of land to public
open space that supports natural coastal processes
Options 5 and 6 are closely related, with Council acquiring all properties where lot size does not
support sufficient building size and setback due to coastal erosion by 2070. Acquisition occurs 30
years prior to the earliest coastal erosion impacts at each property. These properties are then
converted to public open spaces. Under option 6 these buildings are available for leaseback for 15
years after acquisition and then converted to open space. These options do not attempt to manage
coastal erosion but rather aim to reduce the costs of coastal erosion to the public (relative to
alternative options).
For the Eastern Beaches these options return negative NPVs of -$222m and -$70m respectively.
These options avoid the private costs of developing properties which would otherwise be damaged
through coastal erosion and provide amenity benefits to the local community through the new public
open space areas. However, removing the properties before there is any damage from coastal
erosion means that there is a loss of residential use value. This is the value to the people who would
be able to live or work in the properties for the 30 years prior to the coastal erosion damage occurring
(see Box 1 below for further explanation). This loss of residential value is slightly mitigated under
option 6 with the option of leaseback for 15 years, however amenity values are subsequently reduced
due to the delay in conversion of each lot to open space.
For Teewah options 5 and 6 return positive NPVs of $16m and $9m respectively. The results for
Teewah are driven by the very limited number of properties affected by coastal erosion prior to 2100.
Under this option land is transferred from residential use to public open space. The residential use
value of these properties is very high, given the current market value of the properties. There is
currently limited data on the potential value of these properties should they be converted to public
open space. An estimated value of $1 million/ha of additional open space has been used from a study
of the value of public open space in Australia (Ambrey and Fleming, 2014). On this basis, the value of
land as public open space would be lower than for residential use at the Eastern Beaches. It may be
worthwhile undertaking this option however the value of public open space is highly uncertain, and the
results may therefore be over or underestimating these public open space benefits. The value of
these specific public open spaces (in Teewah) to the Noosa community would need to be understood,
through surveys or community consultation.
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Box 1: Example of effects of acquisition compared to non-acquisition
The diagrams below show the difference in the loss value of two properties. One is acquired by
Council in 2040, and the other is destroyed due to coastal erosion in 2070. Both properties are
assumed to be valued at $2 million, would both have been destroyed in 2070 due to coastal
erosion, and were both built in 2000.
Figure 3 Example of effects of property acquisition
5.1.5. Option 7 - Changes to planning provisions to prevent development within the
projected 2070 coastal erosion prone area
Under option 7, changes to planning regulations prevent development within the projected 2070
coastal erosion prone area. This leaves an estimated 66 properties, primarily within the suburbs of
Sunshine and Sunrise Beaches, with lot sizes potentially too small to undertake any rebuilding3 after
3
Assumed to be a reasonable building footprint relative to present day building footprints in these locations
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planning regulations are updated. This option also includes limited dune management and
revegetation to help delay damage to properties and assets.
The planning rules under option 7 are modelled as having two effects:
• limit the development of some properties which can be a net cost or benefit depending on
whether the use value of the developed property is sufficient to pay back the costs of
development before the coastal erosion occurs
• prevent development occurring seaward of some properties, which has the benefit of delaying
damage to those buildings; allowing building use to continue until damage is incurred.
The NPV of option 7 is $73m and therefore the overall effect is positive, with the cost savings from
preventing development outweighing the loss of residential use. This analysis relied on data on the
current value of properties, and the expected rate and value of redevelopments over time, however it
does not account for potential future financial implications for Council. That is, if development is
allowed, despite the known risks, Council might be faced with some future liability in the event of
damage to the property from coastal hazards. From an economic perspective this liability is a cost to
Council and a benefit to landholders and therefore has a net zero effect. However, it does have
distributional and financial implications that should be considered.
Detailed breakdowns of the costs and benefits under each option are provided in the following tables.
Colour coding has been used to highlight the direction of results with darker orange indicating greater
costs to the community and darker blue greater benefits.
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Table 4 Eastern Beaches - Present Values ($m relative to base case)
Option 2 Option 3 Option 4 Option 5 Option 6 Option 7
Costs
Dune management costs 0.1 0.1 0.1
Augmentation costs 220
Seawall costs 55
Property development costs 6 46 46 -58 -52 -34
Benefits
Property benefits 69 502 502 -449 -187 38
Asset benefits 0.3 3 3 0.3
Recreational benefits -1607
Tourism benefits -1265
Non-use benefits -306
Amenity benefits 170 65
Net present value 63 239 -2773 -222 -70 73
Note: Darker orange indicates higher costs, whilst darker blue indicates higher benefits
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Table 5 Teewah - Present Value ($m relative to base case)
Option 2 Option 3 Option 4 Option 5 Option 6
Costs
Dune management costs 0 0
Augmentation costs 17
Seawall costs 7
Property development costs -5 -4
Benefits
Property benefits -23 -11
Asset benefits 0 0 0
Recreational benefits -37
Tourism benefits -11
Non-use benefits -13
Amenity benefits 34 15
Net present value 0 -17 -67 16 9
Note: Darker orange indicates higher costs, whilst darker blue indicates higher benefits
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5.2. Sensitivities
Some key assumptions in the analysis, identified through sensitivity analysis are material to the
findings.These assumptions, set out in Table 6, should be subject to further investigation prior to
implementing any project option. Further sensitivity analysis of the discount rate and other
assumptions used in the analysis is provided in Appendix C.
Table 6 Sensitivities
Assumption Confidence Sensitivity Description
The costs included in the analysis do not fully
reflect the risk to undertaking this option including:
Cost of dune • potential viability of local sand sources
Medium High
augmentation
• costs of transportation
• potential for no sand to be available
Rock There are also implementation cost uncertainties
availability stemming from a feasible rock supply and build
and Medium High and cost times. For example, longer haulage times
construction given limited local supply would imply greater
of seawall costs.
The analysis does not currently account for the
impact of more frequent large storms events
occurring after each augmentation. Modelling of
smaller, more frequent events and the effect this
Storm events Low High
may have should also be considered further. This
could significantly change the years in which
damage would occur, or immediately remove any
benefits of dune augmentation being undertaken.
It is difficult to fully value the benefit of new open
space recreational areas particularly given the
other recreational spaces such as beaches and
Value of new
Low High reserves already in close proximity. Community
parks
consultation could provide further insights on the
associated benefits of increasing public open
space.
The presence of the seawall is expected to lead to
reductions in the beach width and thereby reduce
recreational values, non-use values (including
ecological) and visual amenity. However, at the
Changes in
Low High preliminary stage there is limited confidence on the
beach width
timing or speed of these effects. Based on real
world evidence, the analysis currently assumes
that the beach is completely eroded up to the
seawall.
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5.3. Summary Eastern Beaches For the Eastern Beaches, the most socio-economically feasible adaptation option is dune management and dune augmentation, such as assessed through option 3. It is also likely that planning restrictions (i.e. option 7) may deliver net economic benefits. Whilst option 3 appears to be the most beneficial option in this analysis, it is dependent upon sufficient sand availability to continue to undertake dune augmentation until 2100. It also depends on continued funding and political buy-in for this augmentation to be undertaken every 5 years. The analysis has also not been able to account for the impact of storm events which may also reduce the benefits from dune augmentation or require more frequent interventions at an increased cost. Option 7, whilst delivering lower net benefits than option 3 under this analysis, is lower risk. There are limited additional costs associated with changes to the planning, and no requirements for continued interventions and funding over time. Implementing planning restrictions such as those in option 7, alongside dune augmentation in viable locations is likely to deliver socio-economic benefits to the community and reduce risks. Further investigation into the full costs of dune augmentation and detailed land use planning provisions should therefore be undertaken. Based on this analysis it is unlikely that benefits of acquisitions (such as under options 5 and 6) will outweigh the costs in the Eastern Beaches area. It is also highly unlikely that development of seawalls (option 4) is feasible or appropriate in these locations. In general, the majority of the benefits of all options accrue to a small number of people in the community who currently own beachfront properties. The equity implications of the wider community funding any actions that provide protection for these private properties through the Council should be carefully considered. Teewah In Teewah there are limited benefits from undertaking any type of adaptation activity, as the majority of properties are not affected until 2100. Acquisition of a very limited number of properties may be the most appropriate option in this location. However, the value of this is dependent on the public value of additional open space, particularly in the context of existing adjacent land uses of a similar type. This should be tested through community consultation and preferably an economic analysis of the community’s willingness to pay. AITHER | Final Report 24 Noosa Shire Council – Coastal Hazard Adaptation Plan
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Appendix A: Physical impact assessment (BMT, 2020) Included as a separate attachment AITHER | Final Report 25 Noosa Shire Council – Coastal Hazard Adaptation Plan
Section 28
Appendix B: Assumptions and data
Table B1 Input assumptions
Parameter Value Unit Source Description Confidence
BMT (unpublished) - Mapped coastal Length of beach under
length 12858 metre High
erosion extent for Noosa consideration
Number of households in local
households 295349 no ABS 2016 - Census household data Medium
region
Annual growth in number of
household_growth 0.00 decimal Assumed Low
households
Noosa Surf Lifesaving Club Annual beach use when beach is in
max_beach_use 5530980 no/year Medium
(unpublished) - June 2013 survey excellent condition
beach_use_growth 0.01 decimal Assumed Annual growth in beach use Low
Aither consultations with Noosa
local_prop 0.50 decimal Proportion of beach use by locals Medium
stakeholders
Aither 2018 - Maroochydore coastal Proportion decline in beach use
rec_seawall 0.50 decimal Medium
adaptation study with seawall
Raybould et al. 2011 - A travel cost
local_value 10 $/visit model of local resident’s beach Local recreational value per visit Low
recreation values
Raybould et al. 2011 - A travel cost
Year of estimate for local
local_value_year 2008 year model of local resident’s beach High
recreational value
recreation values
Blackwell 2007 - The value of a
tourist_value 12 $/visit Tourist recreational value per visit Low
recreational beach visit
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Blackwell 2007 - The value of a Year of estimate for tourist
tourist_value_year 2000 year High
recreational beach visit recreational value
World Bank 2019 and OECD 2019 - Annual growth in recreational value
rec_value_growth 0.01 decimal Low
National accounts data per visit
Parsons et al. 2013 - Valuing Beach Threshold at which recreational
rec_value_thresh 3.5 metres Low
Width for Recreational use value per visit declines
Parsons et al. 2013 - Valuing Beach Proportional decline in recreational
rec_value_red 0.14 decimal Low
Width for Recreational use value at threshold
number of tourist days Tourism Research Australia 2018 - Annual number of days spent in
1160000 days High
(day trip visitors) Local Government Area profiles region by tourist day trip visitors
number of tourist days Tourism Research Australia 2018 - Annual number of days spent in
4470000 days High
(overnight visitors) Local Government Area profiles region by tourist overnight visitors
daily expenditure (day Tourism Research Australia 2018 - Daily expenditure by tourist day trip
94 $/day Medium
trip visitors) Local Government Area profiles visitors
daily expenditure Tourism Research Australia 2018 - Daily expenditure by tourist
180 $/day Medium
(overnight visitors) Local Government Area profiles overnight visitors
Tourism Research Australia 2018 - Proportional decline in the number
red_tourism_days 0.18 decimal Low
Local Government Area profiles of tourist days without beach
Weighted average daily
tourist_exp 162 $/day Calculated expenditure across day and High
overnight tourists
Tourism Research Australia 2018 - Year of estimate for tourist
tourist_exp_year 2018 year High
Local Government Area profiles expenditure
World Bank 2019 and OECD 2019 - Annual growth in tourist
tourist_exp_growth 0.01 decimal Low
National accounts data expenditure
current number of tourist
5630000 days Calculated Current annual tourist days
days
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current beach use by
2765490 no visits Calculated Current annual tourist beach use
tourists
Change in tourist days / change in
slope_tourist_days 0.37 decimal Calculated
tourist beach use
int_tourist_days 4594945 days Calculated Annual tourist days without beach
Dwyer et. al. 2005 - The economic
Local benefit per dollar of
ave_net_profit 0.17 $ impacts and benefits of tourism in Low
expenditure
Australia
Pascoe et al. 2017 - What’s my
existence_value 1.8 $/ha/household Non-use value of beach Low
beach worth
Pascoe et al. 2017 - What’s my Year of estimate for non-use value
existence_value_year 2016 year High
beach worth of beach
Ambrey and Fleming 2014 - Public
park_value 1156121 $/ha/yr Value of public open space Low
greenspace and life satisfaction
Ambrey and Fleming 2014 - Public Year of estimate for value of public
park_value_year 2018 year High
greenspace and life satisfaction open space
World Bank 2019 and OECD 2019 - Annual growth in value of public
park_value_growth 0.01 decimal Low
National accounts data open space
Noosa Shire Council (unpublished) - Average size of properties being
prop_size 0.10 ha High
Data acquired
ABS 2019 - Residential property Annual future growth in property
prop_value_growth 0.02 decimal Low
price index values
Annual future growth in building
build_cost_growth 0.01 decimal Assumed Low
costs
priv_discount_rate 0.05 decimal Assumed Private discount rate Medium
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AITHER | Final Report 29 Noosa Shire Council – Coastal Hazard Adaptation Plan AITHER | Final Report 29 Noosa Shire Council - Coastal Hazard Adaptation Plan
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Appendix C: Sensitivity Analysis
The results for the Eastern Beaches and Teewah were also tested using a 7 per cent discount rate, in
line with standard CBA guidelines. Using a 7 per cent discount rate does affect the findings, with
option 3 (Beach Nourishment) going from a strongly positive NPV to close to zero. Other key
assumptions have also been tested but do not significantly affect the findings. The results are
provided in Table C1 and C2.
Table C1 Eastern Beaches results (Net present value)
Dune Nourish Seawall Acquisition Leaseback Planning
(O2) (O3) (O4) (O5) (O6) (O7)
Central results 63 239 -2773 -222 -70 73
7% discount rate 7 0.4 -370 -60 -5 19
20% increase in
implementation
and
63 195 -2784 -222 -70 73
management
costs for all
options
Increase
frequency of
beach
nourishment 63 106 -2773 -222 -70 73
from every 5
years to every 3
years (option 3)
20% reduction in
tourism,
63 239 -2138 -256 -83 73
recreation and
non-use values
Time period 36 114 -1851 -192 -40 50
2020-2080
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Table C2 Teewah results (Net Present Value)
Dune (O2) Nourish (O3) Seawall (O4) Acquisition Leaseback
(O5) (O6)
Central results 0.3 -17 -67 16 9
7% discount 0.1 -2 -10 1 0.3
rate
20% increase in 0.3 -20 -69 16 9
implementation
and
management
costs for all
options
Increase 0.3 -27 -67 16 9
frequency of
beach
nourishment
from every 5
years to every 3
years (option 3)
20% reduction 0.3 -17 -55 9 6
in tourism,
recreation and
non-use values
Time period 0.3 -13 -47 5 0.3
2020-2080
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Section 34
References
Ambrey, C. and Fleming, C., 2014. Public greenspace and life satisfaction in urban Australia. Urban
Studies, 51(6), pp.1290-1321.
Blackwell, B., 2007. The value of a recreational beach visit: An application to Mooloolaba beach and
comparisons with other outdoor recreation sites. Economic Analysis and Policy, 37(1), pp.77-
98.
BMT 2020 (unpublished), Noosa Shire Council Coastal Hazard Adaptation Plan
Dwyer, Larry. & Cooperative Research Centre for Sustainable Tourism., 2005. Economic impacts
and benefits of tourism in Australia : a general equilibrium approach. Gold Coast, Qld : CRC
for Sustainable Tourism
Pascoe, S., Doshi, A., Kovac, M. & Austin, A., 2017. What’s my beach worth? Economic values of
NSW coastal assets.
QCoast2100 2016, Developing a Coastal Hazard Adaptation Strategy: Minimum Standards and
Guideline for Queensland Local Government viewed 2 April 2020,
<http://www.qcoast2100.com.au/documents/6143606/6155749/Minimum Standards and
Guidelines>
Queensland Treasury, 2015, Project Assessment Framework: Cost Benefit Analysis, viewed 2 April
2020, <https://s3.treasury.qld.gov.au/files/paf-cost-benefit-analysis.pdf>
Raybould, M., Lazarow, N., Anning, D., Ware, D. and Blackwell, B., 2011, November. A travel cost
model of local resident’s beach recreation values on the Gold Coast. In 20th NSW Coastal
Conference (Vol. 20, p. 20). Coffs Harbour City Council Coffs Harbour.
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Document history
Revision:
Revision no. 2
Author/s Thomas Swain, Sarah Leck, Simon Hone, Martijn Gough
Checked Martijn Gough
Approved Martijn Gough
Distribution:
Issue date Thursday 2 April 2020
Issued to Noosa Council
Cost benefit analysis of proposed adaptation options for Eastern beaches and
Description
Teewah
For information on this report:
Please contact: Martijn Gough
Mobile: +61 418 753 760
Email: [email protected]
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Section 36
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