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Measuring the cost of a healthy environment

The price of pests

Published: 11 May 2018
Rat eating native bird egg

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What would your return on investment be?

A major government report, Our land 2018, from the Ministry for the Environment published in April painted a dire picture for New Zealand’s native biodiversity and ecosystems, which continue to be under threat. It reveals, aside from habitat loss, nearly 83 per cent of native birds, bats, reptiles and frogs were either threatened or at risk of extinction.

Auckland’s biodiversity is no different. This is why, as part of Auckland Council’s 10-year budget consultation, Aucklanders were presented with two options for increased funding for natural environment investment.

For the first time in the environmental space council has used cost-benefit analysis (CBA) to estimate the likely economic costs and benefits of each option. Using a holistic perspective and recognising a level of uncertainty in our ability to control pests, conservative assumptions regarding likely benefits were adopted so as not to overstate the likely net benefits.

There is a range of benefits for each option ($21pa and $47pa) such as nature-based tourism or avoided agriculture losses, which have a measurable market value. Other benefits, while real, were more intangible – for example, the recreational value of “being in nature”.

The study supports the view that Aucklanders are likely to be better off from both investment options.

The cost of investment for both options offsets the benefits of that investment.

So what does our investment return for us?
• Option A ($21) is expected to deliver $1.08 of benefits for every $1 spent.
• Option B ($47) is expected to deliver $2.80 of benefits for every $1 spent.

This does not include benefits that couldn’t be measured including Māori cultural values associated with improved biodiversity; values associated with preventing species and habitat extinction and health benefits associated with recreation and interacting with nature.

A decision on the targeted rate will be made 31 May at the Finance and Performance Committee meeting and if adopted ratified at the Governing Body meeting in June.

Find the full report here.