Section
Executive Summary
In this study, the city wanted to determine the economic value of the Sharp Park and the surrounding coastal trail. Instinctively, one may think of lost revenues, or possible income which may be generated by keeping the golf course.
However, in the study, it has been determined that the amount earned from the golf course is actually much lesser than the amount required to maintain such. In fact, the city does not even earn from such property. The expense is greater than the revenues generated.
But in the course of the research, it has been ascertained that perhaps, the economic value of such property lies not in the amount it generated. Notwithstanding its positive effects such as being a recreational site, a health facility, being aesthetically pleasing the property offers more.
It may be considered as a barrier from the effects of climate change. Although it cannot stop such event from its tracks, it can at least hamper or slow down the ill effects of such. With erosion already knocking on the shores of California, then perhaps it is time to reconsider reinforcing the natural systems, and also the man made ones such as this golf course to buy time from the water’s eventual swallowing of the land.
Coastal Erosion
Coastal erosion occurs when the rocks, sediments and soil particles that make up the side of a water body constantly chips off, resulting to significant changes to the topography of the area. The wearing away may be due to tides, water action, wind and or other geomorphic processes that naturally occur .
Such geological occurrence would result to the decrease in the land mass of the area being eroded. As a result, the coast is pushed farther inland. At times though, the beach area has already been fully eroded, resulting to the nearest terrestrial property being exposed to a similar phenomenon. In coastal areas for example, the constant lapping of the waves will eventually result to the sides of the cliffs to be chipped off. In fact the smoothness or roughness of the rocks in a coast indicates the level of roughness of a sea. A wave that pounds heavily on the sides of a cliff will result to smoother edges as the pressure is higher as compared to a gentle motion of waves.
At times, human activity causes erosion. For instance, the building of infrastructure, and numerous high rises which require deep excavations result to increased erosion. In California, the construction of long jetties in Folly Beach allowed the beach to lose a large amount of sand material .
Coastal erosion can also be due to rising sea levels. Climate change could drastically change the composition of coast lines, the latter being highly susceptible to geological events. Increase in sea levels, higher temperatures and weather disturbances are factors that highly influence the changes in a particular coastline.
One instance of apparent coastal erosion is in the island of Kiribati which has been reported to have risen an average of 3.2 millimeter annually since 1992, according to the Australian National Tide Center. Kiribati which is made of hundreds of atolls, is a state an island surrounded by an endless coastline. Due to the rising sea levels, the heights of the waves in the state have increased constantly through the years. Such has put immense pressure on the shoreline and sea walls. Moreover, weather disturbances such as hurricanes and cyclones have occurred more frequently, relative to a decade ago
Although climate change and its consequences, being a natural course of things is still highly debatable among scientific circles, it cannot be denied that rising sea levels have been due to the increase in temperatures. Globally, glaciers and solid ice sheets have melted. Such has been observed when the mass balance, or the ice that has been formed over the winter season is lower or smaller in volume as compared with ice that has melted during summer. This is called a negative ice balance .
A specific example of such increase in global temperature resulting to ice melting has been seen in Mount Kilimanjaro in Africa. Being one of the world’s tallest peaks, its top has been covered with solid ice for centuries. However, this past century, such ice covering has been seen to have been partially melted, or thinned out .
Climate Change and Golf Courses
With climate change and rising sea levels, the impact has some economic effects which can me measured or at least estimated to determine whether or not the property affected must be stayed or protected. In doing so, the economic benefits of such property must be properly ascertained. One such case is that of Sharp Golf Course which is the subject of this study.
Sharp Park Golf Course is located in San Francisco. It is beside a coastline and boasts of historic sites. The area has an inland natural lake, the Laguna Salada . Due to its precarious location, it is subject to coastal erosion.
It can be surmised that the case of the erosion of the Sharp Golf Course is related to the rise in sea levels due to climate change. The rise in sea level increases the rate of erosion. A study conducted by the United States Geological Survey found that more than 60% of the beaches are eroding. .
In a relative scale, a land mass that can be considered as sinking, or lowering will experience a higher than the global average sea level. In the United States, Louisiana experienced a sea level rise of 8 inches within 50 years . Meanwhile, in Chesapeake Bay, the inland retreat of the area exacerbates the effect of rising sea levels. Thus, flooding within cities is expected to be more frequent, and so will the occurrence of tidal wetlands .
Sharp’s coastal erosion can be contrasted with that of Montrose. It has been found that Montrose, the fifth oldest golf course in the world is not only being beaten by water-caused erosion but by elements such as wind as well. Despite construction work being made to combat erosion, much of the property has been eaten by the sea.
Economic value of golf course
A golf course does not operate in isolation. It is a piece of prime real estate that people or users pay for to be able to play golf. However, along with the game, it employs several people. For instance, there are golf caddies, water boys and cart drivers. There are also gardeners or those who keep the course aesthetically pleasing. Aside from that golfers of course purchase supplies, golf clubs, clothes and food. While the latter cannot be said to have been directly purchased from the site, at least the golf course has an option of providing saleable refreshments to golfers, the income of which may redound to the economy in general.
In a 2009 study, the game of golf has six clusters. It includes golf facility operations, capital investments, supplies, tournaments and endorsements, tourism and real estate . It can be classified into direct effects, indirect effects and induced effects .
One way to estimate the economic value of a golf course is to estimate its annual revenue. It would justify in a way the utility of the area as a playing ground. Using older estimates wherein there were about 42,000 players, with a standard rate of $42 per round of golf, the course has a value of $ 1.79 million . Such revenue cannot be considered to be really significant for a city. A city has usually a hundred million in budget. Thus, a 1% contribution may be still positive, but still insignificant for the counsel to pay attention to the amount generated by this property.
However, it has been found that golfers may actually be agreeable to paying more than the actual fee they are currently charged with. A study on Colorado golfers found that the demand for the game is inelastic . With that, it suggests that even if the price of a round of golf would increase, players would still continue to play the game. Golfers in the study pay additional fees which include cost of transport and green fees. Thus, it has been found that a round of golf has a surplus of about $18 .
Substitution in economics exists when for instance one good is unavailable, consumers will then opt to consider another good. Such good or product is a substitute, or a total replacement for the unavailable good, due to lack of supply or a price which is too high.
Golf is a game which is highly dependent on the course and the real estate involved in it. Thus, if Sharp Park shall be closed, golfers, especially avid ones will begin to look for other courses which they can come and play in.
Golf is likewise a sport that is more than the physical manifestation of tee offs, courses and balls. It has been around for some time and has been accepted as a form of business communication. Clients and suppliers often meet for a round of golf, to discuss certain matters considered too rigid or formal. Instead of going to the boardroom, some business people prefer to bring the matter over golf to allow for flexibility in terms of the conditions that may be included in the contract for instance, or terms that may be further negotiated.
Thus, to properly establish the substation of Sharp Park as a golf course, it must be determined whether the players that frequent the area do so to play or to conduct business. The purpose of playing golf must be deduced from them. This is necessary since if a golfer plays golf for pleasure, then perhaps, he may not be willing to pay a price. Should the price increase, a pleasure player may quickly substitute such sport for another one. However, for those who are in golf for reasons such as business, they are not quick to react to an increase in price of golf. In fact, they are in golf for a purpose.
If it can be determined that indeed a large number of golfers in Sharp park do business, then perhaps, other activities may properly substitute for its absence. Younger people especially are more flexible in their choices, in that without golf, they can deviate their supposed business meeting over another game. One such option may be perhaps a poker table. A sit down poker may be a good choice for conducting business, provided that no ill will may be linked to the counterparties in the contract that is to be negotiated or inked.
However, golf has been around for a long time, and the business association the game connotes may linger for awhile. As such, it is perhaps safe to assume that should Sharp Park shut down, the golfers will then opt to look for another course in the area.
In the vicinity of Sharp Park, several golf courses are available. There is TPC Harding Park, Presidio Golf Club, Lincoln park Golf Course, GlenEagles and Cypress.
Specifically, Lincoln park is an 18 hole golf course thought by many to have a magnificent view due to its location near a sea cliff. To travel from Sharp to Lincoln Park, one has to shell out an additional $30 on average. With that amount, the propensity of golfers to relocate may perhaps be high, since golf has been considered to be a sport with an inelastic demand.
Meanwhile, Presidio Golf Course located in Finley Road is another course alternative that can be considered should Sharp park be not sustained. However, one round of golf in Presidio costs about $120 . As compared with Lincoln Park, the rates in Presidio is about 3 times that of the former. Thus, a golfer who would opt to play in Presidio would need to pay a premium of $83.
Cypress Golf Club, the most exclusive golfing site in the area costs about $300 per round . Such amounts to 800% of the rate of Sharp Park. Still basing on the assumption that golf is a sport with inelastic demand, then it would indicate that players are still willing to pay a price that much to conduct business meetings or to enjoy a sport. Thus, as compared with Sharp Park, players would have to shell an additional $250 to enjoy the facility.
Economic Loss of Golf Course
There is a demand for 17 hole golf courses. Golfers usually view the 17th hole as the toughest tee shot. Such is the acid test in completing the 18th hole, and thus provides golfers with an experience that is well worth the pay.
In the case of Sharp Park, it can be said that San Francisco would experience some losses should it decide to close the area. Straightforward estimates rendered the nominal loss at about $1.7 million in revenues. However, such still does not take into account the fees that San Francisco itself spends in maintaining the area.
As can be seen in the above calculations, the higher end golf courses would reach up to $300 or perhaps even more with extraneous fees to be included. Thus, a price of $42 charged per person is actually a discounted amount that residents and golfers enjoy. The remaining balance of keeping the golf course in mint condition is shouldered by the city.
Assuming for example that the proper fee which includes the upkeep and maintenance of Sharp park is at $100, then the city actually pays an additional $60 for every player that uses the course. Every tee off the golf course contributes to the erosion of the area and would require a follow up routine maintenance.
Thus as can be seen from above, rate of $100 in the golf course should have generated at least $4.2 million in revenues for the city. Since Sharp Park only collects $42 for each player currently, then, the city has nominal losses amounting to $4.24 million. This still does not include the expense which may be incurred to keep the area from being eroded due to sea level rising.
However, as mentioned above, there is an additional income generated from the golf course. In Europe, the so-called Golf Economy generates additional jobs and numerous positive externalities. In this regard, it creates nominal revenues from the amount paid by golfers for each game. Additionally, it contributes to GDP, with a multiplier effect, as the amount paid is being cycled into the economy, and spent subsequently many times. It also employs people, thus it contributes to the wage income. Having more disposable cash, those employed in the tee or golf course likewise have a multiplier effect on the economy as a whole .
Although golf itself has direct economic effects through the cash paid and subsequently given to the workers in the industry, it has likewise indirect effects. For instance, players will be required to purchase goods and supplies in playing golf. Assuming that one golf club costs $500, a thousand new players on the course annually will immediately generate $500,000 indirect economic revenues.
Coastal Trail
Adjunct to the golf course is the coastal trail. The economic value of the coastal trail may be estimated by the number of visitors in the said area. The utility of the coastal trail can be thus valuated through the volume of passers.
Currently, no specific method exists in the valuation of ecological resources. Such is considered to have been a weakness of environmental science. Without a number or a quantitative link that investors, policy makers and officials can point to, there is no immediacy or urgency when dealing with such issues.
Directly, the value of a coastal trail can be at least measured through the benefits it provides. For instance in a study measuring the economic impact of the ColdWater Mountain Bike Trail System, the amount that users are willing to pay was measured. This was then multiplied to the estimated number of users, resulting to the determination of the nominal direct value of the ecological system. It has been found that the mountain bike trail users were actually willing to pay $16.25 per day
Moreover, in a 2010 study, it has been established that physical spaces and facilities have indeed numerous health impacts and benefits. Parks have been found to have general or public uses, while private spaces have been observed to have immediate impact to the neighborhood and residents as well .
The question remains however is that how much are user willing to pay for a coastal trail. Assuming that each user will be amenable to shelling out about $15, similar to the rate of a mountain bike trail, then having 100 users a day will generate about $1500 in revenue. Such will then translate to a $45,000 additional income generated for the city’s coffers.
The amount may not be huge as compared to the fiscal budget that the city requires in maintaining such facility. For one, the city has to employ staff and maintenance personnel for instance to keep the trail aesthetically pleasing. In addition, it has to put up a seawall to be able to maintain the area and keep true to its purpose.
However, one of the indirect and bigger impact of having an ecological zone or area is to measure the amount that can be potentially saved from keeping or maintaining such kind of property.
Directly, we think of ecological zones as areas that impact health positively. Residents and even visitors may visit the trail to avail of health benefits. Thus the value of the trail can be measured in terms of its propensity to reduce illness or occurrence of diseases. For instance for a trail that induces running, it can allow an individual to decrease his chance of visiting a cardiologist for weight and heart related issues. Thus, a trail has a value of $100 to him. However, for a person recovering from a mental disorder such as depression for example, a trail may have a higher value. Taking into account the medicines he is required to take and the various psychocounselling sessions, then perhaps the trail may be deemed to be worth $5,000 to him alone. This highlights the concept that individual values of a thing, product or good which is not commercially sold depends on the need and urgency to fill in that need of a person.
Thus, for a city to fairly value an ecological property, it is suitable to simply determine the number of persons passing and the amount they are willing to pay. In this case, it has been said to have been $45,000 annually.
Another method is to measure how much the city may be able to save in maintaining the trail. For instance, the unprecedented value of ecological sites have been increasing currently due to the need for such areas. Climate change, global warming in particular calls for more environmental awareness. As such, areas which have plentiful greenery which can absorb carbon dioxide which in turn increases the chance of a greenhouse gas have been more significant than ever.
Golf Course , Coastal Trails and City Budget
Coming now to the issue of whether or not the city should maintain the golf course and the coastal trail, it has to be first settled how much will the city benefit from such decision. While it has been earlier established that the city will gain nominally from the visitors that come to Sharp Park and into the coastal trail, it has been also observed that such amount is miniscule as compared to the expense of actually running an establishment such as that.
Thus, as more proper question is to determine how much the city is going to lose should it let go if such coastal property. While it can bravely decide to simply abandon the property from a financial perspective just to save from the expense of its upkeep, the consequence may of such decision may even be more far reaching, as compared with when the property shall be maintained.
For one, the park provides recreational benefits to its residents. Such cannot be quantitatively measured. But, statistics which point to mental disorders as one of the roots of crime and felonious acts cannot be brushed aside. Moreover, to say that recreation boosts a person’s mental well being is an understatement. One need not empirical evidence nor scientific proof to claim that recreation positively affects the brain.
Aside from that, the park and the coastal trail may be able to provide a health facility to those who cannot afford to do so. These are those who live in borderline poverty. As such, the economic value of the area is to provide a social setting for those who simply cannot pay, as compared with those unwilling to pay.
Additionally, having an open space will ease the pressure from the city government to construct or make provisions for another open or public facility. Having public spaces is mandated by law and details are actually legislated by local officials. Thus, the government has a legal duty to actually construct such open spaces and recreational facilities. Hence, should it decide to abandon or abolish Sharp Park and the coastal trail in the periphery, it will still be compelled to replace such with another similar facility.
In doing so, it has only further exacerbated the problem. While it has fulfilled its legal mandate, the abandonment of the park to the whims of the sea and wind which result to erosion has or may have effects which cannot sill be seen as of the moment.
For one, providing the walls or barriers is still a mandate. Without such sea walls, the coastal erosion would move inward thereby consistently reducing the amount of land available for building and or utilitarian activities. Thus, while it has not protected Sharp Park from erosion, it would need to accomplish two things, build another open space physical facility, and provide sea walls to prevent the tides from easing inwards.
Since it has already been established that the government will still need to construct another such kind of space, we then proceed with the subsequent step. The next step is to determine whether it is a sound economic and fiscal decision to keep or perhaps abandon Sharp park and the coastal trail in the area.
Decision
Assessing the pros and cons and the economic value of the site, we have come to the conclusion that is a better move to actually build a seawall to protect the golf course and the coastal trail.
It has earlier been ruminated that an alternative is to let the area be fully eroded. However, since erosion of coastal sites is a dilemma associated with the ever constant climate change, then perhaps it is time to face the issue with much bravado.
Climate change is inevitable, as it has been considered to be part of evolution. However, human activities have resulted to the quickening of the pace of such. Global warming is here, now. One need not look far, but on the volatile weather, the frequency of cyclones and hurricanes to indeed feel that this climactic phenomenon is now here. Thus, the purpose of saving the area is not as much as to provide recreation nor obtain revenues but to protect the site from climate change and coastal erosion.
Building a seawall will slow down coastal erosion. Whilst it cannot prevent the occurrence of such, it will at least hinder the constant eating of the waves onto the shoreline, thereby buying the area more time from being gulped by rising sea levels.
Thus, keeping Sharp Park and the coastal trail is not really about the revenues from the golfers, nor largely about the health benefits, rather as a security from possible far reaching consequences of global warming.
The cost of global warming has not yet been studied intensively. However, from an instinctive point of view, it indeed is very costly. It can cost us our planet, our lives. With climate change, frequent hurricanes destroy properties and rob out lives. For instance, in hurricane Katrina, while the nominal amount has been set to be about $500 million dollars, the actual amount may have been higher. Such still does not include the rehabilitation, the amount spent for rescuing and social welfare expenses to accommodate those who have been rendered homeless and sick by the hurricane.
Judging from the vicinity, building a seawall may be able to protect the city and its residents. Such will then lessen the propensity of flooding. Flooding alone costs residents some maintenance repair, aside from the nominal amount of things and properties lost and destroyed.
Moreover, as can be seen from the picture, there exists a lake within the golf course. Such lake is a natural one and not man made. Thus, it can be safely said that the lake is home to various ecological habitats. The preservation of ecology and the flora and fauna is a must. Without the balance in nature, chaos will inevitably ensue.
Thus, to summarize, while the maintenance of the area will surely cost the city, it will render the city huge savings when disaster strikes. The provision of a sea wall will protect the area and its citizens from flood. Along with that, it will also ease the extent of coastal erosion which may eventually eat up a portion of the land.
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