Monetising social and environmental costs in infrastructure evaluation: the case of Hong Kong’s third international airport runway

Abstract

Traditionally, governments have been inclined to make economic progress at the expense of social and environmental well-being. Since the 1980s, there have been calls for governments to pursue development in a sustainable way by considering the social and environmental impacts of any infrastructure projects in addition to their concern about economic benefits. In 2010, the construction of the third runway at the Hong Kong International Airport was proposed at an infrastructure cost unprecedented in Hong Kong’s history. This research note uses this development as a case to demonstrate how social and environmental impacts can be monetised by the innovative application of social return on investment (SROI) as weighed against economic benefits in the same currency. It identifies climate change, aviation noise, and damage to the habitat of Chinese white dolphins as impacts from the proposed runway. These impacts are converted into monetary costs under the SROI approach with particular attention to the use of proxies, stakeholder engagement, and the development of various scenarios. Limitations of the analysis and future research directions are discussed.