2021-01-18 GC - Item 3 - Attachment 4 - Cost Benefit Analysis for Noosaville Inundation Options

      impacts of inundation on tourism to the area this has been reduced to a 1 per cent increase in
      tourism relative to the base case.

• Conservative decline in lifespan from inundation – in the central analysis it is assumed that for
  roads and stormwater assets that are frequently inundated, their useable lifespans may be more
  than 50 per cent shorter than without inundation. Under the sensitivity analysis the more
  conservative reduction in lifespan of 15 per cent is assumed.

The results of the sensitivity analysis are shown in Table 3. The results show that option 1 still delivers
a net benefit to the community under most assumptions. These input assumptions are conservative
and therefore it is highly likely that option 1 will deliver a net benefit to the community if undertaken.
However, the sensitivity analysis also demonstrates the importance of the tourism benefits to the
results as these benefits are important in delivering a positive net present value. Better understanding
of the impacts of flooding on tourism should therefore be a key area of focus for the next stages of
assessment.

Table 3: Sensitivity analysis

                                            Option 1 (NPV/BCR)                      Option 2 (NPV/BCR)

    Central results                         $21.5 m / 2.11                          -$3.9 m / 0.80

    4 per cent discount rate                $5.6 m / 1.61                           -$1.2 m / 0.823

    7 per cent discount rate                -$0.6 / 0.82                            -$0.2 / 0.80

    1 per cent improvement in               -$0.2 m / 0.99                          -$9.3 m / 0.51
    tourist visitation

    Conservative decline in                 $18.9 m / 1.97                          -$4.6 m / 0.76
    lifespan from inundation

    20 per cent decrease in                 $14.8 m / 1.76                          -$6.1 m / 0.68
    tourism and recreational
    values


In addition to the sensitivity analysis, a threshold value assessment has been undertaken. This provides
an assessment of the total value of the benefits that would need to be delivered to achieve a BCR of
1.0 or greater. Comparing this to the local population can provide an estimate of the potential benefit
needed for each member of the community. The threshold value approach shows that the Noosaville
population would need to be willing to pay on average $238 per household per annum between 2040
and 2100 under option 1, and an average $255 per household per annum between 2040 and 2100
under option 2.



Recommendations
This report demonstrates that accommodating sea level rises through option 2 (road raising) is
unlikely to deliver net benefits to the community as it provides insufficient protection from low-level


3
    For option 2, a higher discount rate improves the benefit cost ratio as the results for this option are driven by high
       costs in the later years of the analysis. The higher discount rate therefore reduces the present value of costs by a
       greater amount than it reduces the benefits.




REPORT | Noosa Shire Council CHAP – Phase 7                                                                                   8