For discussion
FCR(97-98)59
on 14 November 1997

ITEM FOR FINANCE COMMITTEE

HEAD 22 - AGRICULTURE AND FISHERIES DEPARTMENT
Subhead 700 General other non-recurrent
New item " Consultancy study on wetland compensation"

Members are invited to approve the creation of a new commitment of $50 million for a two-stage consultancy study on wetland compensation.

PROBLEM

There has been continual and cumulative loss of wetland habitats in Hong Kong due to development. Current mitigation measures are not effective in compensating for the loss in wetland resources. Hong Kong has to conserve and promote, as far as possible, the wise use of wetland to fulfill its international obligations.

PROPOSAL

2.The Director of Agriculture and Fisheries (DAF) proposes to commission a two-stage territory-wide study on wetland compensation at a total cost of $50 million to facilitate effective compensation of the loss of wetlands.

JUSTIFICATION

3.Under the Ramsar Convention on Wetlands of International Importance, Hong Kong has an obligation to promote the conservation of its listed wetland in Mai Po and Inner Deep Bay and, as far as possible, the wise use of wetlands in the territory. When there is a need to delete the listed wetland or to restrict its boundaries in the public interest, we should, as far as possible, compensate for its loss, create reserves for waterfowl and protect an adequate portion of the original habitat.

4.The most important and the last remaining continuous stretch of wetland habitat in the territory is in the low lying areas in North and North West New Territories, especially around Inner Deep Bay. Following the reunification of Hong Kong with China on 1 July 1997, the People's Republic of China has confirmed the listing of Mai Po and Inner Deep Bay as the seventh Ramsar site of China. However, the wetlands in the North and North West New Territories regions are subject to increasing development pressure. A number of major public works projects are in progress or under planning in the environmentally sensitive areas in and around the Mai Po and Inner Deep Bay Ramsar Site. We estimate that the public works projects may affect some 300 hectares of wetland in the area. This will increase with more private developments and public projects in the region.

5.In line with current practice, development projects which may have an adverse impact on wetlands are subject to an ecological impact assessment. Mitigation measures are carried out in the light of the assessment but they are often on a project-by-project basis. This approach is not entirely effective in compensating for the cumulative effects of the loss of the wetlands. First, given the specific scope of individual projects, it is difficult for them to accommodate wetland compensation within their sites. Secondly, even if off-site compensation is possible for individual projects, we cannot ascertain the effectiveness of the isolated measures in mitigating the cumulative effects of all projects on the same wetland ecosystem. We consider it necessary, therefore, to conduct a comprehensive study on the overall cumulative impact of development on wetland resources so that we will be better able to develop a comprehensive and rational methodology for implementing mitigation measures on the loss of wetlands.

6.We propose to conduct the study in two stages. The first stage will take nine months and cover the following areas of work -

1. to conduct a survey of existing wetlands and compile an inventory of ecologically important wetlands;

2. to develop a set of criteria for ranking ecological importance of wetlands on a territorial basis;

3. to identify potential sites suitable for replacement or compensation purposes;

4. to assess the cumulative impact of current and proposed projects on wetland resources;

5. to review existing guidelines and criteria for off-site ecological mitigation measures; and

6. to develop a preliminary strategy and methodology for practical off-site mitigation measures to address the cumulative impact on wetland resources.

7.The second stage of the study will involve a 12-month field trial on recommended models for the construction and management of restored and replacement wetland sites. The consultants will test the feasibility of the models, evaluate their effectiveness and refine them on the basis of the findings of the field trial. They will also consider the views of affected parties, including proponents of development projects and land owners/occupiers related to wetlands, and propose action plans for the conservation of wetlands, development control and compensation of unavoidable wetland loss. As conservation of wetlands in Deep Bay will require the co-operation of the Shenzhen Authority, DAF will ask the consultants to recommend the best ways and means of involving the Shenzhen Authority in the long term conservation plan.

8.The results of the study will provide us with effective and practicable means to compensate for lost wetlands that are ecologically important. They will also help the planning of land use affecting wetlands and provide guidance for all future development, private or public, when wetland compensation is necessary. On completion, the study will fulfill the requirement of Environmental Impact Assessments in respect of wetland compensation of future public development, thus saving the time and costs of undertaking separate ecological studies for individual projects.

9.We plan to start the study in February 1998 and take about 27 months to complete it. An outline programme of the study is at Enclosure 1. The proposed timetable of the study is as follows -

	Completion date
First Stage of Study
Preliminary strategy for wetland compensation and habitat restoration	December 1998
Second Stage of Study
Field trial results and assessment	December 1999
Final Report on Recommendation of Strategy : Method and model for wetland compensation and habitat restoration	July 2000

FINANCIAL IMPLICATIONS

10.DAF estimates that the proposal will incur a non-recurrent cost of $50 million, broken down as follows -

11.As regards paragraph 10(a), a detailed breakdown of the estimated total consultancy fees of $20.77 million is at Enclosure 2.

12.As regards paragraph 10(b)(i), the expenditure is for the purchase of computer hardware and software for setting up a geographical information system (GIS) in Agriculture and Fisheries Department. The Department needs the system for data input, updating, manipulation and production of the inventory of wetlands and their resources, and will take over the GIS after endorsement of the final report.

13.As regards paragraph 10(b)(ii), the expenditure is for the purchase of materials and consumable for wetland restoration works, hiring of equipment and travelling expenses in relation to field trials mentioned in paragraphs 10(a)(vi) and (vii) above.

14.As regards paragraph 10(b)(iii), subject to the findings of the study, the expenditure is for employing contractors for the design and carrying out of site preparation/construction/engineering works, including site clearance, earth works and site improvement works which are necessary for field trials.

15.As regards paragraph 10(b)(iv), subject to the technical details to be recommended for field trials, the expenditure is for employing contractors to carry out the field trials on recommended models.

16.As regards paragraph 10(d), the provision is for inflation allowance estimated at 6.6% per year, based on the latest year-on-year movement of the Hang Seng Consumer Price Index.

17.DAF advises that the cash flow of the study will be as follows -

Financial year	$ million
1997-1998	2.5
1998-1999	25.0
1999-2000	11.0
2000-2001	11.5
Total	50.0

18.Subject to Members' approval of the proposal, we will approve under delegated authority supplementary provision of $2.5 million in 1997-98 to meet this year's expenditure. We will include sufficient provision in the annual Estimates of Expenditure for subsequent years.

Consultation

19.The Advisory Council on the Environment supported the proposal when we consulted it in October 1996. We briefed the Provisional Legislative Council Panel on Planning, Lands and Works on 24 October 1997, which also supported the study.

BACKGROUND INFORMATION

20.The Convention on Wetlands of International Importance, also known as the Ramsar Convention from its place of adoption in Iran in 1971, is an inter-governmental treaty which provides the framework for international co-operation on the conservation of wetland habitats. The Ramsar Convention defines wetlands as " areas of marsh, fen, peat land or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed six metres. " Wetlands include a range of habitats from shores, estuaries to inland water bodies, such as marshes, swamps, ponds, rivers and lakes. They perform functions such as water storage and flood mitigation and are essential for the well-being of people who live in or near them. They provide economic benefits such as fisheries and recreation and tourism opportunities. They have special attributes in biological diversity and cultural heritage. These functions, values and attributes can only be maintained if the ecological processes of wetlands are allowed to continue.

21.The Ramsar Convention came into force in 1975. At present there are about 100 state signatories to the Convention. China ratified the Convention in March 1992. Mai Po and Inner Deep Bay was listed as a Ramsar site under the Convention in September 1995 by the United Kingdom and re-listed by China in July 1997.

22.To conserve wetland resources, the Town Planning Board has established two Buffer Zones in the Deep Bay area. We have drawn up guidelines accordingly to control development within the Buffer Zones. The guidelines stipulate that new development within the Deep Bay Buffer Zone 1, which basically covers the Ramsar Site, should not be allowed except for supporting the conservation of the area's natural features and scenic qualities. New development within Deep Bay Buffer Zone 2 would not be considered unless the applicant could demonstrate that the proposed development would have insignificant impact on environment, ecology, drainage, sewerage and traffic in the area.

Planning, Environment and Lands Bureau
November 1997

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Enclosure 2 to FCR(97-98)59

Study on Wetland Compensation
Breakdown of Estimates for the Consultancy Fees

Notes -

1.A multiplier factor of 3 is applied to the Master Pay Scale (MPS) points to arrive at the full staff costs including the consultant's overheads and profit, as the staff will be employed in the consultant's office. A multiplier factor of 2.1 is applied to items (vi) and (vii) for site staff supplied by the consultant.

2.The average monthly salary costs are based on the rate at 1 April 1997. MPS point 40 = $59,210 per month; and MPS point 16 = $19,860 per month.

3.The figures given in this table are based on estimates prepared by Director of Agriculture and Fisheries. We will only know the actual man months and fees required when we have selected the consultants through the usual competitive lump sum fee bidding system.