The Trump Development in Aberdeenshire: resolving the economy Essay

Stewart Dunlop, Fraser of Allander Institute.

Introduction & A ; Background

The development company set up by Donald Trump, Trump International Golf Links Scotland ( TIGLS ) , set out programs in 2007 to make a high-quality golf, hotel and lodging development at the Menie Estate in Aberdeenshire. The key installations involved in the development are:

2 title quality golf classs, capable of hosting major tourneies

A golf clubhouse

A short game area/driving scope

A golf academy

A 5-star, 450 room hotel

A conference country

Watering place

36 Golf Villas

950 Holiday Homes

500 Private Residential Houses

Staff adjustment

The original planning application for Menie was polemically rejected by Aberdeenshire Council[ 1 ], one chief ground being that the TIGLS proposal involved the usage of a Site of Special Scientific Interest ( SSSI, see below )[ 2 ]. Since so, the development procedure has continued with the puting up of a public question into the Trump programs. The question, which sat in June this twelvemonth and is expected to describe in the fall, gave all sides an chance to publically aerate their positions on the issues environing the Menie proposal. While the newsmans ‘ determination will concern merely whether this specific development should be allowed to continue or non, it is interesting to see the issues raised at the question within a wider context – in peculiar, the Trump question illustrates, more than any other issue seen in Scotland in recent old ages, the wider inquiry of how to weigh the economic benefits that such developments can convey against any environmental costs that might result. This article attempts to analyze the economic and environmental positions forwarded during the question and to measure how, in pattern, determinations should be made in state of affairss where struggles of this nature occur. Attention will besides be directed to whether any counsel is available from environmental paperss published by the Scots Government.

Economic Benefits

From a local economic point of view, the proposed Menie development is important in two ways. The first is merely the size of the investing planned at Menie. The 2nd, discussed farther below, associate to how it might impact on certain longer term economic issues in the North East.

First, an appraisal of the economic benefits of TIGLS programs for Menie[ 3 ]shows that the undertaking is expected to make a significant sum of employment and do a important part to Gross Value Added[ 4 ]( GVA ) , both across Scotland and in the environing local economic system[ 5 ]. Appraisals were made of two facets of the proposed development, the economic activity created during the building stage and the more durable employment and GVA created one time the scopes of installations outlined above are operational.

Construction Impact

Construction impacts are of class short term but, given that the proposed installations are estimated to be around ?720 million, they clearly will supply a important encouragement to building demand – estimations suggest that the net employment created across Scotland by the building at Menie will be between 4,694 – 7,042 Full Time Equivalent ( FTE ) occupations[ 6 ].

The spread of the employment estimations ( the upper and lower estimations differ by 2,348 FTE occupations ) reflect uncertainness about the extent to which the Trump development may displace other activity ( i.e. , may take market portion from houses in the building sector ) . Uncertainty sing this was taken history of by following two different premises sing supplanting ( both of which were rather high, the statement being that following a conservative premise reduced the hazard of exaggerating the economic impacts attributable to the undertaking ) . Using English Partnerships counsel[ 7 ], supplanting was assumed to be either 25 % or 50 % – the first premise causes the net activity created to be reduced by 25 % while the 50 % premise assumes that building activity elsewhere in Scotland will fall by 50 % .

The estimations besides made some allowance for escape ( assumed to be 20 % ) because some of the occupations created at Menie may taken up by occupants from outwith the country. Finally, no allowance was made for additionality. Additionality is by and large measured within the context of authorities policy intercessions in the economic system, and efforts to mensurate the net impact of such intercessions. However, as no policy support is proposed for the Menie development, any activity created is therefore entirely extra – the premise is that the activity estimated for the Menie development would non be generated if TIGLS does non put the money required to make the installations at Menie.

GVA estimations were besides produced on the same footing as above ( 25 % and 50 % supplanting, 20 % escape and 100 % additionality ) and, on these premises, the building of the Menie development was estimated to make an extra sum of GVA of ?400 million ( 25 % supplanting ) and ?267 million ( 50 % supplanting ) .

Locally, building of the installations at Menie was estimated to make between 2,165 and 1,443 FTE occupations and between ?120.7 million and ?80.5 million worth of extra GVA.

Operating Impact

As noted, the building impacts outlined above are short-run, since they will be created merely during the period that the development is being constructed. In contrast, the operational impacts are ongoing and represent one-year estimations of the extent to which the Trump development will add to activity, both in Scotland and locally, every bit long as the Menie development continues to run. These estimations show how the development is locally important, in footings both of its size and its longer term consequence on activity in the North-East economic system.

Using a similar set of premises to those outlined above, it was estimated that the development would make between 1,856 – 1,237 FTE occupations and between ?49.2 – ?32.8 million worth of GVA in Scotland. In the North-East ( Aberdeenshire/Aberdeen City ) , the Menie development was estimated to make 1,418-945 FTE occupations in and between ?33.5 million ( 25 % supplanting ) and ?22.3 million worth of GVA ( 50 % supplanting ) .

The structural impact on the local economic system

Besides important, nevertheless, is that the Menie development may assist to turn to what local policymakers recognise as one of the cardinal menaces to the North-East economic system, the jutting diminution in activity and employment in the oil industry. Oil and gas production form the North Sea has fallen well in recent old ages – the Royal Bank of Scotland Oil and Gas Index records that the sum of oil extracted from the North Sea has fallen continuously, from 28.9 million barrels per twenty-four hours ( bpd ) in 1999 to 15.6 bpd in 2007, a autumn of merely over 46 % . While recent additions in oil monetary values may protract the life of the local industry to some extent, it is clear that oil extraction can non in the long-run continue to move as a major local economic driver. The possible employment diminution has been well-recognised by local bureaus with, for illustration, North East Scotland Economic Research foretelling a autumn in oil and gas employment from 39,000 ( 2006 ) to around 25,000 by 2021[ 8 ].

Several local policymakers emphasised to the Trump enquiry the consequent demand to diversify the North East economic system in order to pull occupations to replace those that will travel as oil and gas diminutions. They argued that the Menie development could do a important part to this procedure, peculiarly as the tourer facet of the Menie development fitted closely with the country ‘s agreed development scheme. For illustration, Councillor Anne Robertson, the leader of Aberdeenshire Council, referred to a Council policy papers[ 9 ]which identifies one council aim as being to get a universe category repute for recreational touristry by 2011. She argued that the Menie development will heighten the countries repute globally by supplying Aberdeenshire with a universe category tourer installation. Aberdeen and Grampian Chamber of Commerce argued that peripherality had meant that Aberdeenshire had ever struggled with what it could offer in footings of touristry, and that the countries relative deficiency of first tourer attractive forces had hitherto been a barrier to developing local touristry[ 10 ]. While the size of the Menie development is important in itself, local policymakers besides made field in their statements to the question that the type of development involved was every bit of import, peculiarly in footings of the local variegation scheme.

As to whether developing touristry might stand for a policy of “ endorsing victors ” , recent figures appear to corroborate that it may be so. Tourism activity in Scotland has grown well in recent old ages, and Scotland has besides out-performed the UK in this regard. Scots Government figures[ 11 ]shows that the figure of employees in touristry grew by 19.1 % between 1998-2005, and the proportion of all UK touristry turnover accounted for by Scots touristry increased from 6.6 % to 7.7 % over the same period. Local feelings environing the entreaty of touristry besides appear to chime with the Scots Government ‘s program to increase the figure of tourers sing Scotland. In “ Scots Tourism- the Following Decade ”[ 12 ]the Government points out that planetary growing in touristry is expected to be between to 4-5 % , and Visit Scotland has made promoting golf touristry a primary focal point of selling activities.

Environmental Issues

While the proposed Trump development therefore promises significant economic benefits for the local country and besides appears to be extremely consistent with the sensed future strategic demands of the North-East economic system, the question besides addressed possible environmental losingss, argued to be both nationally and locally important. What were the positions of those conservationists who argued against the development?

The cardinal expostulation advanced by, among others, the Royal Society for the Protection of Birds ( RSPB ) , was the potency for the Menie development to adversely impact the country ‘s natural heritage. Their statement chiefly concerned the importance of the landforms and home grounds within the site, which includes two of the largest nomadic sand dune systems in NW Europe, one of which is designated as a Site of Special Scientific Interest. The RSPB besides pointed to the dune home grounds, which it argued were “ outstanding ” and which sustained many of animate being and works communities of high biodiversity value. It ‘s overall statement concerned the demand to continue the whole ecological community, that is the sum sum of the species and their supporting home ground, reasoning that this was rare in a Scots, UK and European context and was of high scientific value. The RSPB ‘s grounds can outdo be summed up in the inquiry they posed to the question:

“ We should inquire ourselves whether serious environmental harm and break to natural procedures is a necessary and inevitable forfeit to be paid to accomplish perceived economic benefits ”

What is likely the cardinal point is that portion of the development country is designated as an SSSI. An SSSI is an officially designated country[ 13 ]( under the Nature Conservation ( Scotland ) Act 2004 ) and an SSSI appellation purposes to protect “ the best of Scotland ‘s natural heritage[ 14 ]“ . SNH ‘s chief concern over the Menie development was that the stabilization work required on the dunes in order to develop the golf class would so compromise the natural unity and scientific value of the site that this could ensue in the SSSI appellation being withdrawn.

The local council besides recognises the importance of SSSI ‘s. The Aberdeenshire Local Plan argues that SSSI ‘s “ are a really valuable resource, and hence need protection against damaging development ” . Furthermore, the local program besides states explicitly that where a development will adversely impact on an SSSI, it will:

“ Be refused unless the developer proves that any important inauspicious effects on the quality for which the country has been designated are clearly outweighed by societal and economic benefits of national importance ”[ 15 ].

The SSSI issue reflects the key job confronting the newsmans to the Menie Enquiry. This is good expressed in the citation from the RSPB entry above, and can be summed up whether the economic benefits that would doubtless ensue from the Trump development outweigh the environmental cost of the loss of a natural plus? The Menie dunes have been designated as an SSSI because, in the sentiment of the official designating organic structure stand foring the involvements of the Scots population, they are argued to be a alone portion of Scotland ‘s natural heritage. The proposed development would needfully intend harm to an of import natural plus, a point conceded by the developers, who accepted that it would ensue in “ important inauspicious effects on the environment ” but argued that these would be outweighed by the economic benefits that the development would convey.[ 16 ].

The beginning of the struggle

SNH besides noted that it was the determination by TIGLS to develop on the SSSI “ which triggers the obvious struggle between Mr Trump ‘s aspirations and the protection of the environment in regard of which SNH has a duty ”[ 17 ]. The question was made cognizant of alternate designs that did non utilize the SSSI, but the cardinal beginning of struggle remained that, in the sentiment of the golf class designer,[ 18 ]it was necessary to utilize the SSSI portion of the Menie site – failure to make so would intend that the development could non gain the cardinal aim, which is to make “ a world-class, championship links class, in traditional Scots manner, capable of one twenty-four hours hosting a major title ”[ 19 ]. In its concluding entry, TIGLS reiterated that making the universe category golf class that it envisioned required the SSSI land and that it would prefer to retreat the application if this were non allowed[ 20 ].

Can we larn anything from policy paperss?

Given that there is necessarily a struggle between the economic benefits and environmental costs of the proposed Menie development, it would be interesting to larn whether official policy paperss contain any advice on how to continue in the face of such struggles. Unfortunately, this appears non to be the instance. For illustration, the most recent official Scots Government papers on sustainable development[ 21 ]contains a good trade of stuff on the quality of Scotland ‘s natural assets. For illustration:

“ Scotland is blessed with some of the universe ‘s most cherished and particular natural environments… aˆ¦ . One of our cardinal precedences must be to protect those natural resources for the long term and beef up their function as portion of our lives and civilization[ 22 ]

Similarly, the imaginatively titled papers that outlines Scotland ‘s Marine and coastal scheme[ 23 ]argues that “ the Marine and coastal environments around Scotland are vitally of import to the sustainable hereafter of our state ” . Unfortunately nevertheless, neither papers outlines the appropriate action to take in state of affairss where the desire to conserve natural resources is in direct struggle with the possibility of a significant economic addition.

How should we do the determination?

It does look that the newsmans have a hard determination to do. On the one manus there will be a significant economic addition from a undertaking that fits closely with long term local development demands. On the other, this will necessarily take to the loss of a natural plus, one which the functionary heritage organic structure considers to be a portion of the best of Scotland ‘s natural heritage. How should one be weighed against the other?

Clearly, the determination should be made by comparing the benefits that result from the development against the costs that will result. We do hold a considerable sum of grounds on what the development means to the Scottish and local economic systems – the sum of GVA produced by the development measures the economic value created, and so measures what it is “ deserving ” , both across Scotland and locally. However, no comparable estimation was available about the value of the dunes. Since we have no grounds on how people value the natural plus, we have no common criterion against which to compare costs and benefits.

This state of affairs is unfortunate, particularly as there are well-known economic techniques, head among which is Contingent Valuation ( CV ) , that are able to mensurate the value to society of natural resources. CV has the added benefit that it estimates a pecuniary value for the natural plus, and so produces a common criterion of comparing between the economic and environmental effects of a undertaking.

Contingent rating

Contingent rating measures the populace ‘s rating of a natural resource plus. In general footings, the economic value to society of any good or service is measured by what people are prepared to pay for it. If, for illustration, person is prepared to pay ?1 for a coach journey or ?30 for a repast, so what the individual is prepared to pay steps the value that he or she places on that good or service.

The statement that underlies contingent rating, nevertheless, is that what people pay to buy something does non needfully reflect its entire value to society – market monetary values do non needfully reflect the value that persons ( or, by collection, society as a whole ) topographic point on some things. A simple illustration would be where a individual values a dramatic position of a mountain. As it is non possible to sell the position, nevertheless, there is no market monetary value and so no market rating of what the position is deserving to that individual. The Menie dunes are clearly another illustration of this type of natural plus.

This job arises because the mountain position is what is known as “ non-excludable ” – it is either non technically possible or it is prohibitively dearly-won to forestall anyone from appreciating a peculiar piece of scenery. Since people can non be prevented from devouring it, it is non possible for a company to provide it therefore there is no market and no monetary value for the plus.

Contingent rating argues that market monetary values reflect merely what are termed “ usage values ”[ 24 ]. Use values reflect what people will pay to really devour ( “ usage ” ) something such as a coach journey. However, natural resource assets may besides bring forth alleged non-use values, where people value something even if they do non really devour it themselves. Non-use values originate because people may value an facet of some goods that can non be bought or sold through markets for the grounds discussed supra. For illustration, people may non really see a natural plus but may still be willing to pay to hold it preserved for the undermentioned grounds[ 25 ]:

Existence value – they may experience that site is deserving conserving for its ain interest

Option value – people may desire to go forth open the possibility that they will see the site in the hereafter

Bequest values – there may be a desire for the site to be preserved for future coevalss

The technique therefore attempts to gauge the entire value of an activity to society by gauging both usage and non-use values.

The value of environmental rating methods is more widely appreciated in America, peculiarly following the Exxon Valdez instance in Alaska. This was one of the first instances where the technique was used to quantitatively measure the harm to a natural plus following a major oil spill in 1989. The usage of the technique spread further when authorities bureaus in America were given the power to action for harm to environmental resources over which they are legal guardians.

Information on the sum that people in Scotland would pass to continue the Menie dunes would therefore let us to weigh the known value that the Trump development will lend to the Scots economic system – the sum of GVA created at Menie – against the value that people in Scotland topographic point on saving of the dunes. The Trump development is a authoritative illustration of how economic development may conflict with a desire to protect the environment. Given an increased involvement in environmental issues, struggles of this nature are likely to happen once more and it would be utile if these type of economic rating techniques were applied more widely in the hereafter.