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A drone image of the Geum River taken on Mar. 27 from Sejong City. The Four Rivers project drained the river to low water levels that have exposed unprecedented amounts of algae

An audit by the Board of Audit and Inspection (BAI) has found that the extremely low economic value of the Four Rivers Project is causing a severe waste of public funds.

At the BAI’s request, an academic-industrial collaborative team of researchers from Seoul National University reviewed four years of documents from 2013 to 2016 to extrapolate the cost and benefits during a 50-year period beginning in 2013. According to the team’s analysis, the total cost was 31 trillion won (US$27.69 billion) and the total benefits were 6.6 trillion won (US$5.89 billion), for a benefit-cost ratio (BCR) of 0.21. This ratio was the highest for the Han River, at 0.69, followed by the Geum River at 0.17, the Nakdong River at 0.08 and the Yeongsan River at 0.01. Considering that a project is regarded as having economic value when the benefit-cost ratio is at least 1, the Four Rivers Project gets a failing grade in terms of economic value for all four rivers.

The research team found that a total of 31.53 trillion won (US$28.17 billion) had been spent on the Four Rivers Project, including 24.67 trillion won (US$22.04 billion) on project costs, 4.29 trillion won (US$3.83 billion) on maintenance and management and 2.33 trillion won (US$2.08 billion) on reinvestment. In comparison, there were only 6.6 trillion won (US$5.9 billion) in benefits, including 236.3 billion won (US$211.15 million) in improved water quality, 1.49 trillion won (US$1.30 billion) in water utilization, 3.54 trillion won (US$3.16 billion) in water recreation and 1.82 trillion won (US$1.63 billion) in hydroelectric power and the sale of construction aggregate.

mud and sand. (Lee Jeong-a

Significantly, researchers found that the project did not contribute a single won to preventing flood damage, even though that was the justification that the Lee administration used to ram through the Four Rivers Project. The research team did acknowledge that the benefits may have been underestimated somewhat because there have not been rains torrential enough to cause a flood since the Four Rivers Project began.

The reason the government was able to push ahead with the Four Rivers Project despite its paltry economic value was because the requirement for a pre-feasibility study was waived.

In 2009, the Ministry of Strategy and Finance tweaked the enforcement decree of the National Finance Act to exempt disaster prevention projects such as the Four Rivers Project from the requirement for a pre-feasibility study. This was designed to forestall any controversy that might arise from a pre-feasibility study concluding that the project was not economically viable, but this move itself was controversial. Even so, the BAI concluded from this audit that revising the enforcement decree to give disaster prevention projects a blanket exemption from pre-feasibility studies was not unlawful.

Instead, the BAI explained that it had asked the Minister of Strategy and Finance and other officials to be sure they were not remiss in reviewing pre-feasibility studies in violation of regulations. But the research team’s finding that the Four Rivers Project has done nothing to prevent flood damage, which was the reason for categorizing it as a disaster prevention project in the first place, opens the government up to blame for exempting the project from a pre-feasibility study.

In related news, the BAI announced that the 22.2 trillion won (US$19.83 billion) in project fees in the Four Rivers master plan had been calculated based on state expenditures for the Four Rivers Project itself and directly linked projects, while an additional 5.1 trillion won (US$4.56 billion) had been spent on related programs by the state, local governments and state enterprises.

Local governments were responsible for contributing 2.6 trillion won (US$3.32 billion) to the Ministry of Environment’s water quality improvement project between 2009 and 2016; the central government paid 1.8 trillion won (US$1.61 billion) in financial subsidies to raise funds for the Korea Water Resources Corporation by issuing loans; and central and local governments spent 640 billion won (US$571.89 million) on managing and maintaining facilities on the four rivers between 2012 and 2016, the BAI explained.

By Choi Jong-hoon, staff writer

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