Severn Tidal Power Feasibility Study Assessment of the Regional Economic Impacts of Tidal Power Generation in the Severn Estuary Final Report [email protected] [email protected] DTZ Rivergate House 70 Redcliff Street Bristol BS6 6AL 6th January 2009 Contents Executive Summary 3 Crynodeb Gweithredol 14 1. Introduction 25 2. The Economic Impact Assessment Framework 40 3. Construction 42 4. Transport and Logistics 65 5. Fishing 89 6. Land Use and Planning 110 7. Tourism 123 8. Accommodation 135 9. Residential and Population 140 10. Other Industries 147 Appendices Appendix 1 Glossary 169 Appendix 2 Terminology 169 Appendix 3 Key Supporting Policy and Strategy Documents 169 Appendix 4 Volume and Value of Cargo 169 Appendix 5 MDS Transmodal Ltd Initial Port Assessment 170 Appendix 6 DTZ Assessment of Ports Impact 171 Appendix 7 Long List Economic Impact Assessment 171 Quality Assurance Record Checked By: AJ Date: 6th January 2009 Authorised By: GJ Date: 6th January 2009 Executive Summary Executive Summary Introduction The overarching aim of this study is to “undertake an initial assessment of the potential economic impact of the proposed Severn Tidal Power project on the regional economies of Wales and the South West of England1.” The focus of the research is to identify whether proposals defined under the Severn Tidal Power Project are expected to result in significant net positive or net negative economic effects within Wales and the South West economies. In assessing significance, a key requirement of this study is to capture the net economic impact. Therefore, it is important to assess what proportion of the total costs or benefits associated with any of the Severn Tidal Power (STP) options are experienced by the Wales and South West economies. Scenarios There are uncertainties around the economic impact of the options under consideration. At this stage of the wider feasibility study, detailed information relating to the implementation of options is unavailable. With a lack of detailed information it is not possible to assess precisely how different sectors of the South West and Wales economies may respond to the implementation and development of options. Given these uncertainties, the central scenario that we present has been adjusted. This sensitivity assessment changes some key variables to show the potential parameters of impact from the worst case scenario to the best case scenario. Clustering Some options have been clustered together for the purpose of economic impact analysis for two reasons: firstly because they will be very similar in terms of their economic impact; and secondly because at this stage in option development, there is insufficient information available to be able to effectively distinguish their economic impact. However, it should be noted that clustering has the effect of applying STP specific estimates (e.g. construction costs) to clustered sector impacts (e.g. ports) which means that construction periods (i.e. build times) may not tally precisely to the assumed construction phase impact periods (i.e. duration of construction phase impact on a sector). Assessing Economic Impact For each option, we have started with the gross level of economic impact i.e. the headline impact; and accounted for additionality factors to derive the potential net economic impact on the economies of Wales and the South West of England. The scope of this report has covered sectors of the Wales and South West economy that are expected to be most significantly impacted by the range of options. These are construction, 1 Area of impact is the South West of England and Wales, although at times in the report this is referred to as a „regional‟ impact. DTZ Report January 2009 Page 3 transport and logistics (most significantly ports), fishing, land use & planning, tourism, accommodation, residential & population and other industries. Where possible, we have quantified impacts. However, across some areas of economic impact there is only sufficient information to enable a qualitative assessment. Therefore, when considering the net quantitative impact data summarised in this report, it is important to remember those potentially significant un-quantified economic impacts. For each option and area of impact, we have taken a forty year reference period, which includes both the construction phase impacts (which varies by option) and the operational phase impacts. Given the uncertainties about operational impacts, we have also presented these impacts over a shorter ten year period, to show what may happen over the short term. The figures set out below are the net economic impact of the Severn Tidal Power options on the economy of Wales and the South West of England. All Gross Value Added figures presented below are expressed as present values. Overarching Summary The net regional economic impact varies by STP options. In the table below, the sectors of the economy that are significantly impacted by STP options are detailed, with a summary of the direction of impact and the key factors that influence the magnitude of impact. Area of Impact Nature of Impact Key Variations Construction The construction process leads Variations depend on a) the level of gross spend to a net positive economic b) the extent to which spending takes place in impact on the economies of the region and c) the extent to which the Wales and the South West. construction process displaces (or stops) other construction projects from taking place in the region. In general, the more expensive the project, the bigger the net regional economic benefits. Transport and The focus is on the negative Variations related to the proportion of port traffic Logistics (Ports) impact caused by the disruption a) disrupted and b) the potential for other ports to ship movements as a result of to absorb these. STP options that disturb more both the construction process ports (and shipping) have a greater negative and operation of a STP option. impact than those that affect fewer ship The greater the disruption to movements. I.e. taking into account the location shipping the greater the net of STP option and impact on navigation routes. negative economic impact. There may be positive impacts from the importing of construction materials. Fishing The focus is on a negative Key variations are dependent on the impact of impact on economic agents STP options on fish populations. Uncertainties dependent on fish populations. and range of number of factors such as migratory cues, impact of turbines, change of habitat etc that may have a negative impact on fish mean that each STP option is assumed to have the same negative impact on fish population and therefore the agents dependent DTZ Report January 2009 Page 4 Area of Impact Nature of Impact Key Variations on these population levels. Variations between STP options are influenced by the length of the construction period. Land Use and The focus is on the potential Highly uncertain area. However, the large Planning positive economic impact of a barrage is the only option considered to have STP option on reducing flood any significant impact on reducing flood risk. risk and increasing the This area has not been quantified. economic viability of land and property. There are additional potential positive impacts relating to the economic value of construction infrastructure during the operation of a STP option (or post construction). Tourism The focus is on the potential Variations are driven by the scale of direct positive economic development and the potential visible impact on impact associated with visitors Severn Estuary area. I.e. the more visible and to a STP option. There are dramatic the change in estuary, the greater the other potential positive assumed impact on annual visitor numbers. economic impacts from ancillary investment in marina developments, capitalising on reduced water turbidity and improved water access. However, as these require additional investment beyond the scope of the STP option, they have not been quantified in this report. Accommodation Accommodation positive Scale of employment and spend associated with economic impacts are driven the construction of a STP option. The greater by construction impacts, through the spend and labour requirements, the greater the multiplier effects. Therefore, the positive impact on the accommodation these have already been sector. captured in the construction impacts. Residential and The focus of the impact includes This area has not been quantified Population the positive impact of operation employment, positive impacts associated with legacy impacts Other industries The focus of the assessment is The operational impact of STP options depend on other industries impacted by on the level of spend on maintenance and a STP option. The primary operation of the option. In general, the more focus is on the positive expensive the construction costs, the more economic impact associated expensive the operation and maintenance of the with the operation of a STP STP option and the greater the number of jobs option. sustained. DTZ Report January 2009 Page 5 In estimating the net GVA economic impact of the STP options across the construction and operational phase, these sector level impacts have been taken into account. However, in assessing the net employment economic impacts of the STP options, there are issues in relation to a common employment denominator. For example, construction employment is calculated in „persons years‟ to reflect the transitory nature of some construction functions; port impacts are captured as annual average jobs with peak employment impacts and operational impacts are captured as Full Time Equivalent (FTE) jobs. In light of these variations, DTZ have summarised net employment impacts by taking „annual average‟ employment as the common denominator. Therefore, it does not take account of the potential change in employment profiles across the reference period (i.e. in some years there may be more or less employment than captured by the annual average figure). This initial high level study suggests that there will be both gains and losses for Wales and the South West of England from the development of a STP option.