Assistance to the tourist industry

This study has been carried out as part of the government's continuing review of the economy, in particular the levels of assistance provided to various sectors, and examines the levels of assistance given to the tourism sector in New Zealand. The measurement of the effective rates of assistance (as distinct from effective rate of protection) is a relatively new concept but has recently become accepted as a comparative analysis tool. It allows different forms of assistance to be aggregated and for a comparison of the assistance to different sectors of the economy

Development of the South Canterbury / Otago southern bluefin tuna fishery

There is concern that many of New Zealand's inshore fish species are being overfished to the extent that fishing effort will have to be reduced to ensure the continued existence of some species as commercial stocks. A dual solution of both reducing the total level of fishing effort and transferring fishing effort to alternative fisheries to alleviate the problem is possible. This report examines the economics of transferring fishing effort to southern bluefin tuna capture off the South Canterbury / Otago coast, and is therefore an example of the problems and potential in transferring fishing effort. The study pays particular attention to the extension needs in developing fisheries using the results of a census of skippers in the region. Two chapters have been included to give the reader some background to the southern bluefin tuna fishery and the South Canterbury/Otago fishery. From this information the potential benefits of development, the direct cost of catching bluefin and the opportunity cost of foregoing catching traditional species have been estimated. The indirect costs of providing the necessary infrastructure for development were estimated from the survey. The survey also provided information on the readiness of fishermen and their vessels to undertake southern bluefin tuna fishing. This paper does not consider the effect on the traditional fish stocks of transferring catching effort to alternative fisheries. However, consideration is given to the economics of transferring catching effort to alternative fisheries regardless of the reasons for having an effort reduction scheme. The cost benefit analysis has seven scenarios based on the extent to which developing the bluefin fishing is able to alleviate the present inshore fisheries management problems

Recreation demand estimation in New Zealand : An example of the Kaimanawa and Kaweka Forest Parks

This paper is in two parts. The first examines methods of recreation resource evaluation while the second uses an existing data base to discuss the potential applications of one such method in New Zealand. The specific objectives of the report are: 1. To discuss common economic methods of resource valuation, highlighting both their limitations, and potential contributions to the land use debate. 2. To demonstrate the use of one of these methods in valuing a New Zealand recreational resource

Biological control of gorse: an ex-ante evaluation

The incorporation of an economic input to the evaluation of the potential outcome of scientific research work is a relatively new development in New Zealand. This Research Report presents an analysis of the possible effect a research programme output may have on the New Zealand agricultural scene. The possible outcomes have been quantified and an estimation of the value of those outcomes has been provided. This can be used in an assessment of whether work should proceed on the research project, both in terms of the possible outcome values and the costs yet to be incurred carrying out the research. The objective of this report is to estimate the benefits and costs to New Zealand if agents were introduced to naturally regulate gorse. The costs of gorse include both the direct costs of control and indirect costs in the form of the opportunity cost of lost production.Department of Scientific and Industrial Researc

Gorse and goats : considerations for biological control of gorse

Recent proposals have been made to introduce biological agents to naturally regulate gorse (Ulex europaeus) in New Zealand (Hillcost-benefit analysis, 1986). Gorse is a serious scrub weed to both farmers and foresters, but does provide some economic benefits. A comparison of the costs and benefits (Sandrey, 1985) led to the recommendation that, provided all reasonable steps were taken to ensure that agents are host specific, the introduction of these agents is economically efficient. However, several limitations of the study were noted, including the issue of goat enterprises on land containing gorse. Research into using goats to control gorse has been conducted over the last 6 years at Ballantrae, Palmerston North and Loburn, Canterbury. This research has clearly demonstrated that goats can effectively control gorse (Lambert et al., 1981 and Radcliffe, 1983, 1985). The economics of using goats for this purpose has been documented using data from trials at Ballantrae (Krause et al., 1984). With the expansion of the New Zealand goat industry interest in a low input system growing gorse to sustain goats has been expressed (Radcliffe, 1986). This is an extension of using goats to control gorse, and may present an alternative to conventional sheep and cattle production on marginal hill country in the future. The problem is that control of gorse by biological agents may preclude the development of a gorse for goats farming system. If the agents establish successfully and have a major impact on the gorse plant, the cost of controlling these same agents may make such a system uneconomical. Thus, an irreversible situation. The objective of this paper is to examine the concept of irreversibility and the consequences of making an irreversible or irrevocable decision using natural regulation of gorse and the goat industry as an example

Red deer : the economic valuation

With the current downturn in traditional livestock farming investment New Zealand a great deal of interest is being shown in diversification. It is becoming increasing apparent that few options are open to many farmers. Deer and goats are the two most quoted livestock alternatives, but both are constrained by biological factors. Goats are still in a feral updating phase, but the era of feral deer recovery is possibly over. Those deer required to build the herds of the future are predominately domesticated livestock. This last season (1985/86) has seen a dramatic decline in the value of female deer. Controversy exists as to the causes of this decline, as changes to the livestock taxation system were announced during the season. The declared intention of these livestock tax changes has been to obtain neutrality of the taxation system across investment decisions. It is not the purpose of this paper to address the taxation issue, and we will assume that neutrality has been achieved. Weaner hind prices have declined from a forward sale value of some $2,600 in November 1985 for March to May 1986 delivery to some$800 to $1,200 for the same animals at sales over the March-June 1986 period. (See Appendix 1).Declines of weaner values of this nature will have very little impact upon the future time path of the New Zealand deer herd. Until such time as some female weaners are culled for meat, the expansionary phase of the industry will continue. The major impact the decline will have on herd growth is via an expected decline in live capture animals. These animals are becoming less and less important to the New Zealand deer herd, so this effect will be minimal. The most important effect of the decline in values is that of equity. Those farmers in deer farming before the decline in values have seen the value of their animals drop dramatically. For those selling this has been a real loss, for those building up herds the drop has been a substantial paper loss. Gainers have been those buying at the reduced prices and those contemplating purchasing deer. The purpose of this report is to examine the determinants of the economic valuation of female deer and to obtain a valuation to aid those contemplating investing in red deer. Specifically, adult and weaner hind values will be calculated and some sensitivity analyses conducted around the base assumption used

Maori fishing rights in New Zealand : an economic perspective

The present call for recognition of Maori fishing rights is based on the Treaty of Waitangi. Similarities between the Maori rights and recent developments with North American Indian fishing rights are presented and discussed. Traditional Maori fishing and cultural values are discussed and a current Maori position outlined. Economic efficiency issues are examined, and the conclusion is reached that a change to more Maori ownership of fishing rights is unlikely to compromise economic efficiency. Issues arise in trying to value different cultural beliefs between two groups in society, but these differences can be accommodated within an economic model. The major issue is an equity concern, and the debate should concentrate on equity and the legal and moral ramifications of the Treaty of Waitangi

Dynamics of herd buildup in commercial deer production

The study described in this report is valuable in that it explains, in economic terms, the high prices currently being paid for live deer in New Zealand. While there continues to be uncertainty associated with deer velvet prices, the existence of a model such as described in this report is useful to explore the effects that different assumptions on velvet prices (and venison prices) may have on deer prices, slaughter throughputs and venison exports

Government’s role in adverse events assistance

Despite the many factors that contribute to the annual variations in agricultural production, climatic fluctuations explain much of the variability. Although these fluctuations include flood, snow, hail and wind damages, the report concentrates on drought. Given that droughts occur with varying frequency to many parts of the country, the important question from an efficiency perspective is how to ameliorate the cost of these droughts. We are not concerned with measuring the cost of drought by making comparisons with a perfect world that is the so called nirvana fallacy. We are concerned with finding a least cost solution to the whole issue of adverse events. Historically, one of the justifications for government involvement has been that adverse events relief is a so called public good which cannot be accommodated within the private sector. Externalities are said to exist when costs of an action are borne by persons other than those able to be directly affected by the outcome of that action, and it is considered that an externality exists because people other than farmers are affected by droughts or floods. However, recent literature in welfare economics suggests that the existence of externalities do not necessarily require government action. Does the private sector offer a better solution, and, if so, what are the impediments to transferring the role of adverse events relief to the private sector? Government has provided grants and subsidies to mitigate the effects of both droughts and floods in recent years. These schemes, as well as other government policies, are shown to alter the private solution to adverse events. Farmers alter management strategies if it is considered that ad hoc drought relief packages will be available from government. Irrigation is not considered to present an economically viable option for drought risk management, as the costs of premiums are too high. The futures market has little potential for handling climatic risk, as yield and not price is generally affected by droughts and floods. The role of insurance schemes is investigated in detail. Among American, Canadian, Australian and New Zealand programs for adverse events insurance, the Canadian forage crop programs, although in the early stage of development, would appear to have most relevance to New Zealand. All the schemes reviewed, however, lack financial viability without government subsidies. The justification for subsidisation of insurance schemes is that it allows government to withdraw completely from providing solutions on an ad hoc basis and the associated cost involved with these policies. The responsibility passes from a public to a private solution, even though some form of subsidisation would be necessary