Neath and Tennant Canal Restoration: Economic Appraisal, Stage 1 Study Final Report Prepared by Bridge Economics and Hyder Consulting August 2008 EXECUTIVE SUMMARY INTRODUCTION This document has been prepared for Neath Port Talbot County Borough Council, the City and County of Swansea and the Welsh Assembly Government, in accordance with the Terms of Reference and subsequent discussions. The document is an economic appraisal of the restoration of the Neath and Tennant Canals and has been prepared by Bridge Economics in collaboration with Hyder Consulting. As completed restoration projects have shown how economic benefits can be realised, waterways restorations have been taking place across the country. Significant restoration efforts have been made in respect of the Neath and Tennant Canals in recent years and both canals retain a small staff of workers for maintenance purposes. The work of these staff, together with that of volunteers and others who have been involved in specific restoration projects since 1986, has helped to ensure that navigation along parts of each canal has been maintained. Significant lengths of the former routes remain un-navigable, in places the canal routes have been lost, elsewhere whilst in water boats are unable to pass along the canal. The current study was therefore commissioned to ‘assess the economic returns that might be achieved through the restoration of the Neath and Tennant Canals, in order to provide a fully navigable route from Glynneath in the Neath Valley, down to the Prince of Wales Dock, Swansea, on the Tennant Canal, and to Briton Ferry, on the Neath Canal’. The appraisal considers the impact of restoring individual sections of each canal, through examining a ‘full scheme’ restoration option and several ‘partial scheme’ options. The options are compared to a reference case, and the appraisal itself is guided by HM Treasury’s Appraisal and Evaluation in Central Government as well as the European Commission’s Guide to Cost Benefit Analysis of Investment Projects. ECONOMIC AND STRATEGIC CONTEXT The Neath and Tennant Canals pass through a range of landscapes – both urban and rural – and communities within both Neath Port Talbot and Swansea. The communities in these areas vary in their socio-economic circumstances. Within the canal corridors, there are significant contrasts in terms of occupational mix, employment and deprivation, with these differences partly reflecting the different recent experiences of the north and south of the study area – the south having been the focus of the majority of private investment reflecting its closer proximity to the M4 corridor and Swansea. Neath and its immediate environs nevertheless include both the least and the most deprived areas within the study area – with examples of both the top and the bottom 10th percentile SOAs in Wales. i The various strategies and policies for these areas clearly acknowledge the current de- graded condition of the canals and also their potential to contribute positively to the future of their surrounding localities and communities, were they to be restored. The canals are perceived as important and valued assets. Their heritage status is widely recognised as is their close integration with the high quality environment which comprises much of their hinterland. It is these characteristics, together with an emphasis on a new renaissance for the Western Valleys spearheaded by sustainable tourism and regeneration, which ensure that the reinstatement of navigation along either canal directly contributes to, and is wholly consistent with, the stated objectives of the various strategies comprising this study’s policy context. VISITOR AND PROPERTY DEMAND Tourism trends are upwards and positive, both for the sub-region and study area, and the opportunity for further growth is available. There is a strong policy aspiration for future growth, focusing on packaging existing products into complete ‘experiences’, with an emphasis on encouraging short stay trips. The emphasis on the short stay market reflects the picture as a whole in Wales where short holidays of 1-3 nights are more popular than those of 4+ nights. Strategic thinking behind tourism development in the study area focuses on the industrial heritage of the Vale of Neath, and makes use of the ‘hub and cluster’ approach with common themes being cultural and industrial heritage. Of the five main valleys in the county borough, the Vale of Neath is thought to offer the strongest opportunity to create a new geographically based visitor experience. The concept emphasises the opportunities to embrace outdoor pursuits, heritage, and water based assets and accommodation all focusing on the physical environment. The Vale of Neath offers clear potential for the establishment of a second hub in the County Borough, to complement and balance the existing focus of the Afan Forest Park in the neighbouring Afan Valley. The property markets – residential, employment and retail / leisure – in the area are differentiated by their proximity to the M4. Demand from occupiers and developers in the southern portion of the canal corridors is in marked contrast to the less accessible Vale of Neath area, notwithstanding the A465 dual carriageway that leads from the M4 to the ‘Heads of the Valleys’ road. There are few development opportunities that directly abut the canal, other than the Canal Green regeneration area close to Neath town centre, but at this location developer interests would be aligned with those seeking to reinstate navigation. Similarly, there are indications that given a flexible approach to planning and regulatory issues, latent leisure and visitor development interest in the Vale of Neath may be encouraged by the progressive improvement of the Neath Canal corridor. ii OPTION DEVELOPMENT While the stated objective is the full restoration of both canals, providing a navigable link between Glynneath, Swansea and Briton Ferry, it would be possible to implement a partial scheme in the first instance, with safeguarding retained on the full scheme. To examine the full Neath and Tennant ‘system’, and gain an understanding of what partial scheme(s) might be plausibly implemented, we defined ten component elements of the whole network, labelling them Part 1A, 1B, Part 2A, 2B, Part 3A, 3B etc (see Table 1 overleaf). The parts labelled Part 1A, 1B and 1C refer to sections of the Neath Canal heading progressively north west from Bridge Street, Neath, towards Glynneath; the four parts labelled Part 2A, 2B, 2C and 2D refer to sections of the Tennant Canal heading progressively south west from Aberdulais to the Prince of Wales Dock, Swansea; while the three parts labelled Part 3A, 3B and 3C refer to sections of the Neath Canal heading progressively south west from Bridge Street, Neath to Briton Ferry. A schematic map of these route sections is included on page 32 of the main document. On one level, these route sections or ‘building blocks’ can be seen simply as sub-options that could be implemented as stepping stones on the way to full restoration of the Neath and Tennant Canals. All of them together comprise the full proposal - restoration of navigation from Glynneath in the north to Swansea and Briton Ferry in the south. Alternatively the ‘building blocks’ can be used to assemble ‘restoration packages’ each of which can be costed as an option and appraised. In preparing the list of options, our assessment considered the existing navigable stretches of canal, and the abandoned sections north of Ysgwrfa, south of Giant’s Grave and west of Jersey Marine, to ensure that the options considered would be practicable and realistic. We also drew on the views expressed to us by various stakeholders. This preparation suggested that the minimum components required for the restoration to give realistic economic outputs would be either Part 1A and/or 2A; the Part 3 components could also be worthwhile if Parts 3A and 3B were pursued together. These are the logical ‘minimum’ options to proceed with because they allow the currently navigable lengths of canal (taking into account progress made during previous restorations) to be joined together, thereby helping to achieve early critical mass. The separate options appraised, and the separate adjacent parts or canal route sections that make up these options, are shown in Table 1. iii Table 1 Neath and Tennant Canals: Component Parts and Options Route Description of work required Option Section Neath Canal (North) from Bridge Street, Neath to Glynneath Part 1A Restoration of Neath Canal at Abergarwed, addressing Commercial Rd crossing at Resolven, providing Option navigation from Bridge Street, Neath 1A to Ysgwrfa Option 1B Option 1C Part 1B Restoration of Neath Canal between Ysgwrfa and Lamb and Flag, Glynneath Part 1C Neath Canal from Lamb and Flag to Centre of Glynneath Tennant Canal, from Aberdulais Aqueduct to Prince of Wales Dock, Swansea Part 2A Restore Aberdulais Aqueduct, upgrade Tennant Canal from Aberdulais to Option Neath 2A Option 2B Option Part 2B Restore Tennant Canal from Neath to 2C Jersey Marine Option Part 2C Restore Tennant Canal from Jersey 2D Marine to Port Tennant Part 2D Restore Tennant Canal from Port Tennant to Prince of Wales Dock, Swansea Neath Canal (South) from Bridge Street, Neath to Briton Ferry Part 3A Restore Neath Canal between Bridge Street (including addressing Bridge Option Street low bridge) to Green Street, 3A Neath Option Part 3B Restore Neath Canal between Green 3B Street, Neath and Giant’s Grave, Option includes restoration of navigation at 3C The Green bridge in Neath Part 3C Restore Neath Canal from Giant’s Grave to original terminus at Briton Ferry A Full Scheme option was also appraised, to assess the economic viability of restoring all sections of the Neath and Tennant Canals together, and a Do Minimum option was appraised, to provide a reference case for comparison. Finally three partial options were appraised, each being a ‘package’ or combination of the options in the table above.