Cruise ship dock business case predicts up to US$439 million benefit

Earlier report warned of possible loss of US$72 million

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 The final business case for the cruise pier project estimates a potential economic upside of some US$439 million over 20 years for the Cayman Islands.  

Even if the worst economic impacts associated with the loss of reefs in George Town harbor were realized, consultant PwC concluded in its report that the project would still deliver a net benefit to the economy of US$112 million. 

However, an earlier analysis, also released Tuesday, put the potential net economic gain from the project at US$213 million and concluded that in the worst case scenario, the project could lead to a loss of US$72 million. 

Those figures were revised upwards by PwC to reach the final conclusion based on additional research from Business Research & Economic Advisors, updating figures on cruise passenger spending. 

The consultants acknowledge in both documents that an absence of solid data means there is a considerable disparity between the potential upside and the possible downside based on differing assumptions made about passenger spending and behavior in response to the port construction. 

Tourism Minister Moses Kirkconnell said the government is confident that the final conclusions of the business case, which factors in the findings of nine other reports commissioned on the project, including the Environmental Impact Assessment, show it is in the best economic interests of the country. 

He said there is still room for discussion about altering the design of the proposed port, potentially moving it into deeper water to minimize the destruction of coral reefs. Government is in discussions with cruise lines, and Mr. Kirkconnell said nothing is off the table, including alternative designs involving the use of cable cars or floating dock structures. 

“The cruise lines are going to be our partners. They are the ones who have the most experience in building piers; they have to be involved in these decisions,” he said. “They are the ones who can say if these things will work or not.” 

He said the release of the addenda to the business case meant that government had put all the available information before the public. He said the final addendum, which estimated an economic impact in the range of US$112 million to US$439 million, was the basis for Premier Alden McLaughlin’s announcement last month that government would move to the next phase of the cruise pier project. 

Cabinet has still not rubber-stamped that decision, as Environment Minister Wayne Panton is off island, but is expected to do so next week. 

In both documents, PwC warns that an absence of data on scuba diver spending, specifically associated with George Town’s reefs, and a lack of information on how they would respond to cruise piers being built, made it difficult to assess the potential economic downsides of the project.  

The estimated losses to the dive industry as a whole differ considerably based on unknown variables, including how many divers actually use the George Town reefs, how much they spend on diving in the capital, and whether they would continue to spend that money in the Cayman Islands, diving on other reefs, if the George Town sites were lost. 

The first addendum, dated July 31, 2015, notes, “The current data which underpin the economic and environmental impacts are inconclusive and do not provide the basis for drawing a definitive conclusion about whether or not to proceed with the Cruise Berthing Facility. 

“Prior to continuing with the project, it would, therefore, be valuable to develop a more detailed understanding of the scale of the impacts put at risk by the [Cruise Berthing Facility] and the anticipated behavior of ‘divers’ in response to loss of parts of the George Town Harbor reefs.” 

The second document, dated September 2015, factors in an additional survey about cruise ship passenger spending, though it contains the same disclaimer that more research on diver spending and response is needed. 

The additional Business Research & Economic Advisors report analyzed passenger spending in ports with cruise piers, compared to Grand Cayman, and concluded that new piers would mean passengers spent longer time on shore and spent more money on island, resulting in an estimated additional economic impact of at least US$25 million a year. 

The PwC addendum notes, “The estimated economic benefits of the Cruise Berthing Facility now exceed the environmental costs associated with the damage to the reef under the ‘low’ and ‘high’ environmental impact scenarios. Further, if BREA’s scenarios for increased spend per passenger with the CBF are taken into account, the net benefits increase substantially.” 

Mr. Kirkconnell said proceeding with the project is in the best interests of the country. He said government had put all the information out there and was doing everything it could to ensure the balance between the economy and the environment. He insisted moving the pier to deeper water and reducing coral damage is still an option. 

Ahead of a planned protest of the cruise project on Saturday, he said, “The protesters are saying the same thing we are saying. They are for cruise berthing, but they want the least possible environmental impact.” 

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A tender ferries passengers to a cruise ship in George Town harbor. Under the proposal to build a cruise berthing dock, tenders would no longer be required. – PHOTO: CHRIS COURT
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  1. I’m sure it will add more money to the economy… it will mean more people can come and see our dilapidated capital and our massive mountain of garbage.
    I try and envision George Town oceanside in the future. No shore diving from town, no nice sunset views from the balcony of some of the local restaurants with ice breezes and the sound of breaking waves…. more congestion on Front street all the way to Safehaven and public beach… more Jolly Trolly.
    And thats just what we are going to see above the water line.. go below and witness the mass destruction of the reefs and loss of marine life that was a center piece of the city. all gone. You will be able to see these massive cruiseships docked in GT from Rum Point….. its going to be a sad day to see it all gone

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  2. I think that a lot of this dock project is out of the powers/control of P.w.C to precisely predict the gains and loses, as they have said,that they don’t have the figures on the diving in George town harbor, they also don’t have the control over mother nature to say after the harbor is dredged, where the silt would go outside of the harbor and cause damage to corals/environment outside of the harbor would be. Mr. KirkConnell for you to say, they are the ones who can say if these things will work or not, off course they would say yes, because it would benefit them, and they don’t care what it costs you and what damages are done in the process. I think that this is what you politicians should be doing, looking out for the interest of the Islands and the people to make sure that projects and development is done in the best and the safest way for the benefits for the Islands.

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  3. Consultant P.w.C.’s egregiously inflated figure of a net economic gain of $213,000,000 from cruise pier project destroying the present and historic charm of Hogsty Bay is pie in the sky. What are the benefits of megaships being able to dock close to shore? What were the benefits of the Titanic? Before committing to the destruction and reconstruction of Hogsty Bay, the ramifications of thousands of cruise passengers being discharged from megaships to run amok throughout George Town should be considered and rejected.

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  4. In relation to the amount of scuba diving in George Town harbour, and related matters as to possible amount of economic losses for that very specific microsegment IF that is reduced etc. due to cruise berthing becoming operational, there are some factual data available from official sources. For example:
    The data from the Cayman Islands’ Compendium of Statistics 2014 show that the number of Air passengers stating "Dive" as their "reason for visit" is significantly down for 2014 and moreover has been flat or slightly declining each year since 2010. The statistic for 2014 is 32% below the 2012 figure (5.6%) used in Appendix J2 of the Baird "Environmental Statement". Thus it is clearly obvious that the more likely economic loss would be way less than shown in the original Appendix J2.

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  5. Everyone has been asking for the information and now we have it.

    I read in a comment on Facebook that James Whittaker (Sky-Bridge) said that he would support the dock if it showed +$1 net benefit. Well James it seems like you now have 112 million reasons at a minimum to back the government going forward.

    Somewhere along the line people are going to have to realize that this project is needed and will happen whether today or in the next several years. Do we really want to wait until cruise business starts to disappear from Cayman? In my opinion we are already very late, but not too late, getting into this century.

    At least the PPM government seems to be taking the approach of making the best design for Cayman and not waiting for a single developer to come in with their own plans on how to fleece the country.

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  6. I would like to see a detailed study of exactly who would benefit from this project and to what extent. We know our local tour operators miss out as they are squeezed with minimal margins by the cruise ships . The duty free stores always complain they get lots of "looks" but very little valuable business from the ship passengers.
    Undoubtedly a big increase in passenger traffic would place an enormous strain on our infrastructure and environment to the detriment of all local residents,but how many would directly benefit?.

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  7. The issue of some people who can’t stand the truth of the subject is quite obvious, as many good comments that are posted on the article gets thumbs down, are you people reading these comments upside down?

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  8. Once you start quoting millions peoples eyes glaze over like a rabbit in the headlights, and drooling at the prospect of table scraps.

    so 112 Million over 20 years…

    That’s only 5.6 Million a year – not a lot of benefit for one heck of a gamble

    Invest the proposed 200 million cost in a high yield account instead and you could get 10 Million a year in interest!

    Of course they DONT have the money…

    Laughable

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  9. Something from this release that needs huge attention is the fact that minister Kirkconnell acknowledges that changes can be made and will be considered to lessen the environmental impact.

    They are considering moving the piers deeper to reduce the need for dredging. This idea is not far from the Sky Bridge or floating dock as moving the piers out as deep a feasible makes the most sense.

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  10. PwC anticipates a likely increase in spending because the piers would allow passengers more time ashore. Any economists among us who can come up with a mathematical formula which shows that greater opportunity actually persuades shoppers to spend more than their notional budget for buying some memorabilia.

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  11. Agree with Andy Gray
    This country needs money?

    Sorry for being so blunt, but 1 billion dollars (not sure USD or KYD) is still unaccounted for. (Auditor General: $1 billion ?unaccounted for?22 October, 2014)

    Re-read Compass’ Editorial 19 February, 2015 "GASBOY, continued: Fuel for abuse of public funds" .

    May be, after all, they don’t so much need money, but rather need to learn how to spend it?

    If money match your intelligence, it serve you, if not, they destroy you. Cliche, but true.

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  12. So the answer is to pay someone a bunch of money for an honest report then pay more money for one that will say what you want it to say , how ingenious…

    So basically the dock will pay for the turtle farm subsidy.

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