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HMS Scylla Final Report.Pages An Assessment of the Socio- Economic Impact of the Sinking of HMS Scylla Report prepared for the South West Regional Development Agency by the South West Economy Centre, University of Plymouth March 2003 Contents Executive Summary 3 1. Introduction 6 2. Background 7 3. Analysis of the Arc Proposals 9 4. An Analysis of the ARC Economic Impact 14 Forecasts 5. Centre of Excellence 20 6. The SWEC Impact Assessment 27 7. The Scylla Project and SWRDA’s Targetary 33 Framework 8. Overview of Costs and Benefits of the Project 35 References 37 2 Executive Summary The aim of this study is to advise the South West Regional Development Agency (SWRDA) as to whether the economic and social benefits of placing HMS Scylla on the seabed in Whitsand Bay are sufficient to warrant their financial support for the project as proposed by ARC. The key points to emerge from the report are: The ARC Budget Proposals The costs of financing the project are likely to exceed the original budget projection due to an increase in the cost of purchasing HMS Scylla and other additional costs. The costs of several key elements of the project remain to be finalised. These include the purchase price, the cost of insurance and mooring costs. The original budget contains an assumption that certain services are provided freely or undertaken by voluntary labour. However, it is possible that some of these services will need to be purchased on the market. Until all outstanding issues are resolved, an upper limit of expenditure on the project is impossible to confirm. The final cost is likely to be at least £600,000 and could be substantially more. The Economic Impact of the Project ARC's estimate of the economic impact of the sinking of the Scylla suffers from a number of weaknesses in method of calculation and clarity of exposition. A reworking of the ARC calculations based on their underlying assumptions implies an estimate of the economic impact of the project of £0.8m p.a. Most of the assumptions underlying the ARC assessment of the economic impact of the project are reasonable. However, the analysis contains relatively optimistic assumptions concerning the extent of weekday diving and non-diving expenditure. SWEC has estimated the impact of the sinking of the Scylla by developing four scenarios based upon alternative assumptions concerning the additional number of diver days arising from the sinking of the Scylla. SWEC estimates that the placement of Scylla will add between £0.17m (pessimistic scenario) and £0.67m (optimistic scenario) to GDP p.a. and create between 7 and 30 FTE jobs within the South West economy. Most of these benefits are likely to accrue within the Plymouth sub-region. The experience of other artificial reef projects suggests that successful marketing is likely to be a key factor in determining the overall success of the project. The Centre of Excellence (COE) No detailed outline of a COE is contained in the proposal. Consequently, SWERC sought the opinions of a wide variety of organisations and individuals. 3 Opinion was generally supportive of the development of a COE. However, there were different views as to the nature of any new development. Three main views were articulated. A COE might involve: • A loose co-ordination of existing diving related activities. • A specific site acting as a one-stop shop for diving related services such as training and accommodation. • A specific site, which also acts as the focus for the wider cluster of diving related activities in the sub-region. Some concern was expressed as to how a COE would impact on existing businesses and also the financial viability of a new site, given the difficulties experienced by Fort Bovisand. There were divided opinions on the location of a new centre, although Fort Bovisand was the most frequently mentioned option. The funding of a COE is an unresolved issue. A successful sinking of the Scylla would provide a crucial foundation upon which to base the subsequent development of a COE. A quantitative estimate of the costs and benefits of a COE is impossible until the nature of a centre, its location and sources of funding are established. Economic benefits from a COE might include the impact of construction work, additional divers attracted to all wrecks in the area, additional tourist numbers, new businesses attracted into the area and expenditure on training courses. Social Benefits Potential social benefits arising from the project include the use value of the artificial reef to divers able to use the reef at no direct cost, environmental benefits arising from the creation of a location that will provide a breeding ground for fish and other marine life, enhanced opportunities for disabled diving, increased research possibilities and linking a COE to the wider community and education sector. SWRDA’s Targets The sinking of the Scylla is, in itself, only likely to make a modest contribution to the achievement of SWRDA’s targets. However, benefits could be enhanced over the long term by the development of a COE. Targets to which the project could potentially contribute include the regional outcome targets of sustainable economic performance, employment and enterprise, and the annual core milestones of employment opportunities, brownfield land development and education and skills. Overview and Recommendations In absolute terms, the economic benefits of the sinking of the Scylla are modest. However, these benefits are likely to "pay back" the initial investment over a relatively short period of time (2-5 years). The project will also create additional social benefits, make a modest contribution to the achievement of SWRDA's targets, 4 assist the development of a key urban area and complement the development of the wider marine sector. The Scylla is also a unique project that will help to "put Plymouth on the map" if it attracts substantial media coverage. Overall, there is a moderately strong case for SWRDA to fund the project. However, it is important for SWRDA to recognise that there are a number of issues that create uncertainty concerning the costs of the project. These issues need to be resolved before SWRDA can ascertain the level of financial commitment required. The development of a COE will change the economic benefits and costs of the project. However, these costs and benefits are uncertain until a detailed proposal is presented. There are some concerns including the impact of the centre on existing businesses and its financial viability. Given the uncertainties surrounding a COE, SWRDA may wish to establish a framework for bringing together those organisations that are interested in the development of a centre to elaborate more detailed proposals, whilst monitoring the actual impact of the sinking of the Scylla. This would also allow time for a more detailed investigation of alternative sites and sources of funding. This approach would effectively regard the development of a COE as a medium or long-term option. 5 1. Introduction 1.1. The aim of this study is to advise the South West Regional Development Agency (SWRDA) as to whether the economic and social benefits of placing HMS Scylla on the seabed in Whitsand Bay are sufficient to warrant their financial support for the project. Within this context, the study has two specific objectives. • To provide an analysis of the potential social and economic impacts of the placement of HMS Scylla and to evaluate the effect that the development of a diving Centre of Excellence could have on these impacts. • To evaluate the placement of HMS Scylla against SWRDA's targetary framework, and to provide an analysis of the costs and benefits of the likely outputs of the project. 1.2. A variety of information sources were utilised to conduct the study. These include: • Documents provided by SWRDA and ARC concerning the proposals. • Existing research concerned with the economic impact of artificial reefs and the diving industry. • Interviews with a wide variety of organisations potentially involved with or affected by the proposals. • An e-mail survey of members of the British Sub-Aqua Club. • Interviews with participants at the 2003 London Diving Show. 1.3. An evaluation of the economic impact of the development was conducted utilising the input-output model of the South West Economy Centre. 1.4. Section 6 presents the economic impact projections of the SWEC model and assesses the wider social benefits and costs of the project. Section 7 examines the project within the context of SWRDA’s targets and milestones. The conclusion summarises the key points and recommendations to arise from the analysis. 1.5. The aim of this study is to advise the South West Regional Development Agency (SWRDA) as to whether the economic and social benefits of placing HMS Scylla on the seabed in Whitsand Bay are sufficient to warrant their financial support for the project. Within this context, the study has two specific objectives. 6 2. Background 2.1. Modern artificial reefs serve a variety of purposes including promoting marine life, commercial and sport fishing, diving, education and research. The use of reefs for recreational diving is a relatively modern development that has occurred since World War Two as a consequence of the development of reliable scuba-diving equipment. Whilst artificial reefs can be constructed in a variety of ways, there has been an increasing trend to utilising decommissioned warships. This type of artificial reef has been developed in a number of countries including the USA, Japan, Canada, Australia, New Zealand and the Cayman Islands. 2.2. There are a number of significant advantages to utilising ships as the basis for artificial reefs. These include: • Divers place a high value on exploring wrecks that “look like ships” but many historical wrecks have deteriorated over time.
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