Environmentally Sound and Profitable Development of Forest and mountainous Areas

2.2

Environmentally Sound and Profitable Development of Forest and mountainous Areas

자연친화적 산지개발을 위한 경제성 제고방안 연구

Yeong-Kook Choi, Chongwon Kim, Soo-Uk Lee and Won-Chul Kim,

Background and Purpose

Although policy to increase the amount of land available for urban use has been persistently implemented, it could not catch up with the rapid pace of urbanization and industrialization. Development of forest and mountainous areas is considered as a primary source of land supply to deal with the shortage of land available for urban use.

The development project should be carefully planned and implemented to minimize the damage to natural environment and to maintain business profitability. In order to preserve the natural environment and to build the facilities in harmony with the surrounding environment, the development method should be different from the current method in terms of the establishment of basic environment infrastructure, project time, development density, etc.

Methodology and Major Areas of Analysis

The present research consists of four parts; 1) past trend in the mountainous area development, 2) public opinion survey, 3) economic analysis on the mountainous area development, and 4) institutional measures to enhance economic feasibility.

First, the trend of developing the mountainous area for urban use has been in continuous decline. Due to the lack of consideration for regional characteristics and surrounding areas when the development project is carried out, the annual average amount of land being developed has shrunk. That is, the annual average amount of land being developed for urban use during 1985∼1997 was 86.3㎢.

Although during 1985∼1990 it was 93.7㎢, it decreased to 80.0㎢ for the period of 1991∼1997.

Second, survey has been conducted for the households of the urban and garden houses in order to investigate the overall public opinion on the mountainous area development and to estimate their willingness to pay the additional cost for the environmentally-friendly project.

Survey results regarding the mountainous area development are as follows. It was concluded that survey respondents prefer pleasant environment to living convenience. 30% of respondents are willing to move to the housing located in forest and mountainous areas and additional 40% are willing to do the same if all the necessary infrastructures are in place. 73.5% of the respondents prefer single-house, town-house, and low-level apartment in the mountainous area.

They are willing to pay the additional cost of about 370,000 won per pyong(9%

of total house price at average) if pleasant environment can be guaranteed.

Third, economic feasibility study was conducted on the development project in the following procedure.

<figure> Structure of Economic Feasibility Study

Conclusion and Policy Implications

For economic feasibility study, 10 different areas Korean were selected in consideration of regional characteristics, location, size of the development project, etc. The current development project cost was carefully compared with the environmentally-friendly development project cost in all subject areas. Each subject area has 128 simulation scenarios on the business profitability. The simulation results can be summarized as follows: In general, if the development

First Stage

Cost analysis of development of flat land in comparison with mountainous area

Study the effect of

environmentally friendly development of mountainous area

Assessment of the additional cost the public is willling to pay for envirionmentally friendly project

Cost fluctuation in the subject areas

Second Stage Third Stage Forth Stage

size is larger than 60,000 pyong and the land price is dropped by 10%, then the developer can make both ends meet, providing necessary access roads within 4km and environmentally sound treatment facilities regardless of development density. If the development size is around 30,000-50,000 pyong, then it is not certain whether the project is profitable. In this case, developer can benefit only if the land price is dropped more than 30%. Small size development (less than 20,000 pyong) cannot guarantee profits in almost all the scenario including building the access road and basic environmental facilities.

Fourth, institutional improvement measures to enhance economic feasibility were devised to reduce the project cost and to facilitate the mountainous area development. In order to save the project cost, the cost for land construction should be reduced. To facilitate the development project, it is necessary to simplify the permission procedures. Environment impact assessment should be omitted under the condition that the developmental guidelines are strictly observed. Developers should be exempt from the development cost sharing as well. Laws and basic plan for the use and management of the forest and mountainous areas should be established to secure environmentally sound development.