Project Efficiency Assessment for Eco-Industrial Area

Abstract

This study evaluates efficiency of the developed eco-industrial area project by applying a principle of costs and benefits. The objective is to compare costs and benefits between establishment of eco-industrial area and typical industrial one. Therefore, this study investigates the project costs from construction, maintenance, and operation in both fixed and variable costs. Furthermore, valuation of direct returns from income and indirect benefits from the development of eco-industrial area project were also conducted, based on the technique of experimental behavior or Choice Experiment to estimate the willingness to pay of factories in the projects. Finally, the results were compared with costs and all benefits to calculate the efficiency of the developed eco-industrial area project to support investment decision. The results of this research are intended to incentivize developers to choose to invest in an eco-industrial area project. A method was developed to analyze indirect benefits through questionnaires, such as a willingness to pay to maintain environmental quality. The value of the indirect benefits of developing the eco-industrial area per year equals 148,965,380.64 baht when combined with the direct returns of the eco-industrial area project and comparing costs-benefits. Cost analysis found that the Eco-Industrial Area Project has a net profit equal to 25,948,470,863.00 baht and has a payback period of 2.82 years, which shows that it is a fast payback period, which is very attractive for investment because the payback period of an industrial park/zone is approximately 3.27 years. Which is derived from comparing the development costs of the project with the direct benefits calculated as profit. However, suppose the development is in the form of eco-industrial areas. In that case, there will be additional indirect benefits that can be assessed from the willingness of factory operators to pay for the value of investments in environmentally-friendly industrial areas. This results in a faster return on investment and may meet the demand from many factory operators in the current era who have a positive attitude towards maintaining environmental quality, coexisting peacefully with communities, reducing pollution and impacts that could lead to conflicts, and potentially enhancing economic competitiveness.