Bart Schultz
First, South Korea. In an earlier contribution to Flevolands Geheugen about the Saemangeum coastal reclamation project, I wrote that in 1985 I was involved in a ranking of plans for 140 proposed reclamation projects along the west and south coasts of South Korea. That contribution primarily focused on an overview of the proposed reclamation projects. I didn't address the cost-benefit analyses that we also conducted at the time. The South Korean Ministry of Finance required a so-called internal rate of return of 12%. Most plans fell short of this requirement.
Now, you can always calculate on paper that a plan is still feasible, but we did not like to do that. We then presented our Korean colleagues with three alternative approaches. The first was: don't create polders, but expropriate land. We asked about land prices in South Korea. It turned out that at the time, land prices around the capital, Seoul, were already four times higher than land prices around Amsterdam. In comparison, the land reclamation projects were much cheaper.
The second approach was based on the usual cost-benefit analyses, which assume that the project, for example, the construction of a pumping station, a bridge, or a sluice, is depreciated after a certain period, say fifty years. However, a land reclamation project is different, because after depreciation, the national government, which is usually responsible for the land reclamation, still owns the land. After such a period of fifty years, land in a densely populated country is many times more valuable than it was during the land reclamation.
The third approach involved the draining of the Haarlemmermeer, resulting in a polder of 18,100 hectares, between 1848 and 1852. This project did cost the national government 13,789,377 guilders. The reclaimed lands were sold by auction for in total 9,377,262 guilders. This represented a construction cost of 760 guilders per hectare and a deficit of 245 guilders per hectare.
When I was completing my PhD study on Water management of the drained lakes in the Netherlands in the early 1990s, the construction costs for the proposed Markerwaard reclamation project were 35,000 guilders per hectare. If the deficits per hectare during the Markerwaard reclamation project were proportionally as high as those resulting from the reclamation of the Haarlemmermeer Polder, the deficit would be 11,250 guilders per hectare.
By 1992 standards, the National government had incurred a total loss of 200 million guilders on the reclamation of the Haarlemmermeer Polder. However, the revenue of the national government from agriculture in the polder at that time amounted to approximately 75 million guilders per year. The net profit of Schiphol Airport, of which the national government is the largest shareholder, was 50 million guilders per year. Based on these results, I concluded in one of the theses in my dissertation that, despite the loss of almost 30% on the costs of the project, the reclamation of the Haarlemmermeer Polder should be considered a highly successful National project.
The Tijdschrift voor Waterstaatsgeschiedenis, a Dutch journal devoted to water management and its history, recently published an article that I wrote about the Haarlemmermeer Polder. While preparing the article, I inquired about the value of the buildings in the polder. In 2020, it turned out to be over € 34.4 billion. This more than proved my 1992 thesis.
When I was involved in the development planning of the Markerwaard Polder, I also discussed the above calculation regarding the Haarlemmermeer Polder and its associated principles with the Financial Department of the Ministry of Transport, Public Works and Water Management. I was very kindly told:
"You are right, but that's not how we calculate it."
They continued to use the fifty-year depreciation method. Incidentally, this was not the main reason that the Markerwaard project did not go ahead.
