NZAIA
  • Home
    • Environmental Impact Assessment
    • Social Impact Assessment
    • Strategic Environmental Assessment
    • Community & Stakeholder Engagement
    • Management, Monitoring and Reporting
  • About Us
    • Core Group >
      • Core Group Meeting Minutes
    • Our Partners and Affiliates
    • AGMs
    • Constitution changes 2025
    • Ethics
  • Membership
    • Sign Up for NZAIA Membership
    • 2025 Calendar Year Membership Subscription Renewal
  • Conferences
    • Conference 2024 >
      • Conference Programme 2024
      • Proceedings 2024
    • Proceedings from Past Conferences >
      • Conference 2023 >
        • Pacific Day 2023
        • 2023 Students
      • 2022 - Wellbeing, Sustainability and Impact Assessment: towards more integrated policy-making >
        • Posters
        • 2022 Students
      • 2021 - Social Impact Assessment >
        • Posters
        • 2021 Students
      • 2019 - Climate Change >
        • Posters
        • 2019 Students
        • Conference Photos
        • Contact List
      • 2018 - Regional Development
      • 2016 - Strategic Environmental Assessment
      • 2015 - Where to for Impact Assessment?
      • 2014 - Transport Infrastructure
      • 2013 Fresh Water Management
      • 2012 - Mineral Extraction
    • Sign up for occasional updates from NZAIA
  • Impact Connector
    • Issue #16 SIA for rural resilience and wellbeing >
      • SIA for rural resilience and wellbeing: Intro
      • The drivers and agents of on-farm change in Aotearoa New Zealand
      • Social-ecological assessment for remote and island communities
      • The Impact of Substandard Rural Housing on Resilience and Wellbeing in Te Tai Tokerau
      • Success factors for planning regeneration in rural areas
    • Issue #15 Economic methods and Impact Assessment >
      • Economic methods in impact assessment: an introduction
      • The Nature of Economic Analysis for Resource Management
      • The State-of-the-Art and Prospects: Economic Valuation of Ecosystem Services in Environmental Impact Assessment
      • Economic impact assessment and regional development: reflections on Queensland mining impacts
      • Fonterra’s policy on economic incentives for promoting sustainable farming practices
    • Issue #14 Impact assessment for infrastructure development >
      • Impact assessment for infrastructure development - an introduction
      • Place Matters: The importance of geographic assessment of areas of influence in understanding the social effects of large-scale transport investment in Wellington
      • Unplanned Consequences? New Zealand's experiment with urban (un)planning and infrastructure implications
      • Reflections on infrastructure, Town and Country planning and intimations of SIA in the late 1970s and early 1980s
      • SIA guidance for infrastructure and economic development projects
      • Scoping in impact assessments for infrastructure projects: Reflections on South African experiences
      • Impact Assessment for Pacific Island Infrastructure
    • Issue #13 Health impact assessment: practice issues >
      • Introduction to health impact assessment: practice issues
      • International Health Impact Assessment – a personal view
      • Use of Health Impact Assessment to develop climate change adaptation plans for health
      • An integrated approach to assessing health impacts
      • Assessing the health and social impacts of transport policies and projects
      • Whither HIA in New Zealand….or just wither?
    • Issue #12 Risk Assessment: Case Studies and Approaches >
      • Introduction
      • Risk Assessment and Impact Assessment : A perspective from Victoria, Australia
      • The New and Adaptive Paradigm Needed to Manage Rising Coastal Risks
      • Reflections on Using Risk Assessments in Understanding Climate Change Adaptation Needs in Te Taitokerau Northland
      • Values-Based Impact Assessment and Emergency Management
      • Certainty about Communicating Uncertainty: Assessment of Flood Loss and Damage
      • Improving Understanding of Rockfall Geohazard Risk in New Zealand
      • Normalised New Zealand Natural Disaster Insurance Losses: 1968-2019
      • Houston, We Have a Problem - Seamless Integration of Weather and Climate Forecast for Community Resilience
      • Innovating with Online Data to Understand Risk and Impact in a Data Poor Environment
    • Impact Connector #11 Climate Change Mitigation, Adaptation, and Impact Assessment: views from the Pacific >
      • Introduction
      • Climate change adaptation and mitigation, impact assessment, and decision-making: a Pacific perspective
      • Climate adaptation and impact assessment in the Pacific: overview of SPREP-sponsored presentations
      • Land and Sea: Integrated Assessment of the Temaiku Land and Urban Development Project in Kiribati
      • Strategic Environmental Assessment: Rising to the SDG Challenge
      • Coastal Engineering for Climate Change Resilience in Eastern Tongatapu, Tonga
      • Climate-induced Migration in the Pacific: The Role of New Zealand
    • Impact Connector #10 Climate Change Mitigation and Adaptation >
      • Introduction
      • Is a “just transition” possible for Māori?
      • Adapting to Climate Change on Scale: Addressing the Challenge and Understanding the Impacts of Asia Mega-Cities
      • How responding to climate change might affect health, for better or for worse
      • Kanuka, Kereru and carbon capture - Assessing the effects of a programme taking a fresh look at the hill and high country land resource
      • Wairoa: Community perceptions of increased afforestation
      • Te Kākahu Kahukura Ecological Restoration project: A story within a story
    • Issue #9 Impacts of Covid-19 >
      • Introduction to Impact Connector Issue 9 – Impact assessment and Covid 19
      • Covid-19 fast-track consenting: climate change legacy key to success
      • Tourism – the long haul ahead
      • Making sense of the impact of Covid-19: planning, politics, and the public good
    • Issue #8 Social Impact Assessment >
      • Challenges for Social Impact Assessment in New Zealand: looking backwards and looking forwards
      • Insights from the eighties: early Social Impact Assessment reports on rural community dynamics
      • Impact Assessment and the Capitals Framework: A Systems-based Approach to Understanding and Evaluating Wellbeing
      • Building resilience in Rural Communities – a focus on mobile population groups
      • Assessing the Impacts of a New Cycle Trail: A Fieldnote
      • The challenges of a new biodiversity strategy for social impact assessment (SIA)
      • “Say goodbye to traffic”? The role of SIA in establishing whether ‘air taxis’ are the logical next step in the evolution of transportation
    • Issue #7 Ecological Impact Assessment >
      • The future of Ecological Impact Assessment in New Zealand
      • Ecological impact assessment and roading projects
      • EcIA and the Resource Management Act
      • Professional Practice and implementation of EcIA
      • EcIA in the Marine Environment
    • Issue #6 Landscape Assessment >
      • Introduction
      • Lives and landscapes: who cares, what about, and does it matter?
      • Regional Landscape Inconsistency
      • Landscape management in the new world order
      • Landscape assessment and the Environment Court
      • Natural character assessments and provisions in a coastal environment
      • The Assessment and Management of Amenity
      • The rise of the THIMBY
      • Landscape - Is there a common understanding of the Common?
    • Issue #5 Cultural Impact Assessment >
      • Introduction
      • Potential of Cultural Impact Assessment
      • The Mitigation Dilemma
      • CIA and decision-making
      • Insights and observations on CIA
      • Achieving sustainability through CIA
      • CIA - Enhancing or diminishing mauri?
      • Strategic Indigenous Impact Assessment?
    • Issue #4 Marine Environment >
      • Introduction
      • Iwi, Impact Assessment and Marine Environment
      • Sea-Bed Mining Application in Taranaki
      • The wreck of the MV Rena
      • High Court RMA Controls on Fishing
      • Initiatives in the Pacific Islands
      • SEA in an NZ context
    • Issue #3 Strategic Environmental Assessment
    • Issue #2
    • Issue #1
  • Resources
    • Webinars
    • IAIA Resources
    • United Nations Guidance
    • Donors Guidelines and Principles
    • Oceania and the Pacific
    • Natural Systems >
      • Biodiversity & Ecosystem Services
      • Agriculture & Food Systems
      • Water Management
    • Social Impact Assessment
    • Health Impact Assessment >
      • Climate Change & Health
      • Air Quality Impact Assessment
    • Cumulative Impact Assessment
    • Community and Stakeholder Engagement
    • Indigenous Peoples
    • Climate Change and Disaster Risk Resilience >
      • Adaptation Planning
      • Nature-based Solutions
    • Urban Development
    • Sustainable Development Goals
    • Strategic Environmental Assessment
    • Regulatory Impact Assessment
    • Methods in Impact Assessment
  • Community
    • Membership Directory
    • News
    • Policy Submissions >
      • Submissions
    • Courses
  • 2025 Calendar Year Membership Subscription Renewal

Economic methods and impact assessment: an introduction


Sophal Chhun & Richard Morgan
Introduction
This issue of Impact Connector focuses on the use of economic methods and instruments to inform decision making and policy settings within the impact assessment context, to support sustainable development.  Among the various economic methods so far developed, economic valuation of the environment, or environmental valuation, has been increasingly used to inform and justify decision-making about resource development. This is a response to traditional cost benefit analyses lacking information about certain values, especially those related to intangible ecosystem services.  This leads to such services being perversely treated as having “no value” or at least being given less weight relative to tangible values, such as marketed goods when trade-offs between these values are considered (TEEB, 2010).  Economic impact assessment (EcIA) is another method that has emerged, to be used as part of, or in parallel to, conventional impact assessment (IA) in a decision-making process.  At a project level, EcIA quantifies, among other things, the socio-economic impacts of proposals such as value added or the contribution to GDP and employment.  At a policy level, EcIA can be used in parallel with other IAs to provide quantified costs/benefits of the policy - for example,  as part of a ‘section 32’ report under the RMA in New Zealand.  

Despite broad application, there is still lively debate about the relative merits and perceived methodological weaknesses of various economic methods, and how methods and practices can be improved.  

Based on “over a decade’s experience in applied freshwater economics for local government’s regional sector” Emma Moran (EM Consulting) examines the application of economic analyses to improve policy making in resource development.  The article puts forward pragmatic ideas for more effective economic analyses that will be consistent with the forthcoming environmental and planning legislation, and will help policy makers more effectively avoid the unintended consequences of their decisions.
The editors asked Prof. Murray Patterson (Massey University) to reflect on the economic valuation of ecosystem services, a topic for which he has established an international reputation, and comment on the use of such methods in impact assessment.  His article provides an excellent primer on the origin and approaches to the challenge of economic valuation of ecosystem services, before considering some of the key issues facing practitioners wanting to assign monetary value to such services, and includes an updated table of ecosystem service unit values for New Zealand land and nearshore ecosystems. Prof Patterson also includes an overview of his work with iwi/hapu to examine the ecosystem services concept in the context of Te Ao Maori, and recognises that cultural and spiritual values, while important components of ecosystem services, should not be subject to economic valuation, but incorporated into decision-making in other ways.  The final section of the article makes recommendations for impact assessment practice.

Economic impact assessment is well established in Queensland, Australia, and complements their environmental impact assessment processes.  Dr Galina Williams uses the mining sector to analyse current EcIA practice.   Specifically, she uses a technique called data envelopment analysis (DEA) to compare regions where mining projects were approved to other regions to assess whether EcIA was leading to greater efficiencies in resource use, and identify how practice could be improved to improve resource use efficiency. Dr Williams suggests the current focus in EcIA on employment and income growth should be expanded to include wider socio-economic indicators, to provide a better picture of potential impacts when designing regional economic policies.
In addition to valuation methods and EcIA, it is important to recognise the potential contribution of  economic instruments  to incentivise behaviour changes.  These can be used to promote positive environmental impacts (e.g. payment for ecosystem services), discourage activities that have adverse environmental impacts (e.g. pollution taxes), internalise adverse impacts, or make the polluters responsible for their impacts (e.g. NZ ETS).  These instruments provide an important toolkit that may be of use in developing impact mitigation measures, particularly with regard to policy development.  It is not practical to cover such a large topic in this issue of the NZAIA Impact Connector – we can only refer you to some excellent works on the topics, including Smith et al. (2013), Hayes et al (2022), Yeldan (2019), Metcalf (2021),  and Diaz-Rainey & Tulloch (2018).   However, we did want to provi.de a practical example of the use of an economic instrument to promote better environmental outcomes, and it comes from the dairy industry.  

Michael Hide, General Manager for Sustainable Dairying, describes Fonterra’s policy on economic incentives for promoting sustainable farming practices in New Zealand.  Interestingly, while the financial incentives underpin the first two levels of the programme, the reward for achieving the third level, sustained better environmental practices, is a non-monetary one:  the status of being recognised as a top performing dairy operation.

The editors would like to thank the contributors to this issue and trust that our readers are informed and stimulated by reading this issue of NZAIA's Impact Connector.  Using economic methods in impact assessment can be challenging, so we hope these examples of the application of economic methods and instruments help to overcome some of the challenges.
References
Diaz-Rainey, I. and Tulloch, D.J. (2018). Carbon pricing and system thinking: Lessons from the New Zealand Emissions Trading Scheme. Energy Economics, 73: 66-79 https://doi.org/10.1016/j.eneco.2018.04.035

Hayes, T., Murtinho, F., Wolff, H. et al. (2022)  Effectiveness of payment for ecosystem services after loss and uncertainty of compensation.  Nature Sustainability, 5, 81–88  https://doi.org/10.1038/s41893-021-00804-5

Metcalf, G.E. (2021), Carbon Taxes in Theory and Practice. Annual Review of Resource Economics, 13:245-265. https://doi.org/10.1146/annurev-resource-102519-113630

Smith, S., Rowcroft, P., Everard, M., Couldrick, L., Reed, M., Rogers, H., Quick, T., Eves, C. and White, C. (2013). Payments for Ecosystem Services: A Best Practice Guide. Defra, London.

TEEB. (2010). The Economics of Ecosystem and Biodiversity for Local and Regional Policy Makers. http://www.teebweb.org/wp-content/uploads/Study%20and%20Reports/Reports/Local%20and%20Regional%20Policy%20Makers/D2%20Report/TEEB_Local_Policy-Makers_Report.pdf

Yeldan, E. (2019). Chapter 9 – Economic instruments of greening, in Acar, S. and Yeldan, E. Handbook of Green Economics, Academic Press. https://doi.org/10.1016/B978-0-12-816635-2.00009-2

Download as a PDF
CONTACT US
​NZAIA Incorporated is a registered charity 
#CC54658
This website and all its content is SSL Protected. 
Privacy Policy

  • Home
    • Environmental Impact Assessment
    • Social Impact Assessment
    • Strategic Environmental Assessment
    • Community & Stakeholder Engagement
    • Management, Monitoring and Reporting
  • About Us
    • Core Group >
      • Core Group Meeting Minutes
    • Our Partners and Affiliates
    • AGMs
    • Constitution changes 2025
    • Ethics
  • Membership
    • Sign Up for NZAIA Membership
    • 2025 Calendar Year Membership Subscription Renewal
  • Conferences
    • Conference 2024 >
      • Conference Programme 2024
      • Proceedings 2024
    • Proceedings from Past Conferences >
      • Conference 2023 >
        • Pacific Day 2023
        • 2023 Students
      • 2022 - Wellbeing, Sustainability and Impact Assessment: towards more integrated policy-making >
        • Posters
        • 2022 Students
      • 2021 - Social Impact Assessment >
        • Posters
        • 2021 Students
      • 2019 - Climate Change >
        • Posters
        • 2019 Students
        • Conference Photos
        • Contact List
      • 2018 - Regional Development
      • 2016 - Strategic Environmental Assessment
      • 2015 - Where to for Impact Assessment?
      • 2014 - Transport Infrastructure
      • 2013 Fresh Water Management
      • 2012 - Mineral Extraction
    • Sign up for occasional updates from NZAIA
  • Impact Connector
    • Issue #16 SIA for rural resilience and wellbeing >
      • SIA for rural resilience and wellbeing: Intro
      • The drivers and agents of on-farm change in Aotearoa New Zealand
      • Social-ecological assessment for remote and island communities
      • The Impact of Substandard Rural Housing on Resilience and Wellbeing in Te Tai Tokerau
      • Success factors for planning regeneration in rural areas
    • Issue #15 Economic methods and Impact Assessment >
      • Economic methods in impact assessment: an introduction
      • The Nature of Economic Analysis for Resource Management
      • The State-of-the-Art and Prospects: Economic Valuation of Ecosystem Services in Environmental Impact Assessment
      • Economic impact assessment and regional development: reflections on Queensland mining impacts
      • Fonterra’s policy on economic incentives for promoting sustainable farming practices
    • Issue #14 Impact assessment for infrastructure development >
      • Impact assessment for infrastructure development - an introduction
      • Place Matters: The importance of geographic assessment of areas of influence in understanding the social effects of large-scale transport investment in Wellington
      • Unplanned Consequences? New Zealand's experiment with urban (un)planning and infrastructure implications
      • Reflections on infrastructure, Town and Country planning and intimations of SIA in the late 1970s and early 1980s
      • SIA guidance for infrastructure and economic development projects
      • Scoping in impact assessments for infrastructure projects: Reflections on South African experiences
      • Impact Assessment for Pacific Island Infrastructure
    • Issue #13 Health impact assessment: practice issues >
      • Introduction to health impact assessment: practice issues
      • International Health Impact Assessment – a personal view
      • Use of Health Impact Assessment to develop climate change adaptation plans for health
      • An integrated approach to assessing health impacts
      • Assessing the health and social impacts of transport policies and projects
      • Whither HIA in New Zealand….or just wither?
    • Issue #12 Risk Assessment: Case Studies and Approaches >
      • Introduction
      • Risk Assessment and Impact Assessment : A perspective from Victoria, Australia
      • The New and Adaptive Paradigm Needed to Manage Rising Coastal Risks
      • Reflections on Using Risk Assessments in Understanding Climate Change Adaptation Needs in Te Taitokerau Northland
      • Values-Based Impact Assessment and Emergency Management
      • Certainty about Communicating Uncertainty: Assessment of Flood Loss and Damage
      • Improving Understanding of Rockfall Geohazard Risk in New Zealand
      • Normalised New Zealand Natural Disaster Insurance Losses: 1968-2019
      • Houston, We Have a Problem - Seamless Integration of Weather and Climate Forecast for Community Resilience
      • Innovating with Online Data to Understand Risk and Impact in a Data Poor Environment
    • Impact Connector #11 Climate Change Mitigation, Adaptation, and Impact Assessment: views from the Pacific >
      • Introduction
      • Climate change adaptation and mitigation, impact assessment, and decision-making: a Pacific perspective
      • Climate adaptation and impact assessment in the Pacific: overview of SPREP-sponsored presentations
      • Land and Sea: Integrated Assessment of the Temaiku Land and Urban Development Project in Kiribati
      • Strategic Environmental Assessment: Rising to the SDG Challenge
      • Coastal Engineering for Climate Change Resilience in Eastern Tongatapu, Tonga
      • Climate-induced Migration in the Pacific: The Role of New Zealand
    • Impact Connector #10 Climate Change Mitigation and Adaptation >
      • Introduction
      • Is a “just transition” possible for Māori?
      • Adapting to Climate Change on Scale: Addressing the Challenge and Understanding the Impacts of Asia Mega-Cities
      • How responding to climate change might affect health, for better or for worse
      • Kanuka, Kereru and carbon capture - Assessing the effects of a programme taking a fresh look at the hill and high country land resource
      • Wairoa: Community perceptions of increased afforestation
      • Te Kākahu Kahukura Ecological Restoration project: A story within a story
    • Issue #9 Impacts of Covid-19 >
      • Introduction to Impact Connector Issue 9 – Impact assessment and Covid 19
      • Covid-19 fast-track consenting: climate change legacy key to success
      • Tourism – the long haul ahead
      • Making sense of the impact of Covid-19: planning, politics, and the public good
    • Issue #8 Social Impact Assessment >
      • Challenges for Social Impact Assessment in New Zealand: looking backwards and looking forwards
      • Insights from the eighties: early Social Impact Assessment reports on rural community dynamics
      • Impact Assessment and the Capitals Framework: A Systems-based Approach to Understanding and Evaluating Wellbeing
      • Building resilience in Rural Communities – a focus on mobile population groups
      • Assessing the Impacts of a New Cycle Trail: A Fieldnote
      • The challenges of a new biodiversity strategy for social impact assessment (SIA)
      • “Say goodbye to traffic”? The role of SIA in establishing whether ‘air taxis’ are the logical next step in the evolution of transportation
    • Issue #7 Ecological Impact Assessment >
      • The future of Ecological Impact Assessment in New Zealand
      • Ecological impact assessment and roading projects
      • EcIA and the Resource Management Act
      • Professional Practice and implementation of EcIA
      • EcIA in the Marine Environment
    • Issue #6 Landscape Assessment >
      • Introduction
      • Lives and landscapes: who cares, what about, and does it matter?
      • Regional Landscape Inconsistency
      • Landscape management in the new world order
      • Landscape assessment and the Environment Court
      • Natural character assessments and provisions in a coastal environment
      • The Assessment and Management of Amenity
      • The rise of the THIMBY
      • Landscape - Is there a common understanding of the Common?
    • Issue #5 Cultural Impact Assessment >
      • Introduction
      • Potential of Cultural Impact Assessment
      • The Mitigation Dilemma
      • CIA and decision-making
      • Insights and observations on CIA
      • Achieving sustainability through CIA
      • CIA - Enhancing or diminishing mauri?
      • Strategic Indigenous Impact Assessment?
    • Issue #4 Marine Environment >
      • Introduction
      • Iwi, Impact Assessment and Marine Environment
      • Sea-Bed Mining Application in Taranaki
      • The wreck of the MV Rena
      • High Court RMA Controls on Fishing
      • Initiatives in the Pacific Islands
      • SEA in an NZ context
    • Issue #3 Strategic Environmental Assessment
    • Issue #2
    • Issue #1
  • Resources
    • Webinars
    • IAIA Resources
    • United Nations Guidance
    • Donors Guidelines and Principles
    • Oceania and the Pacific
    • Natural Systems >
      • Biodiversity & Ecosystem Services
      • Agriculture & Food Systems
      • Water Management
    • Social Impact Assessment
    • Health Impact Assessment >
      • Climate Change & Health
      • Air Quality Impact Assessment
    • Cumulative Impact Assessment
    • Community and Stakeholder Engagement
    • Indigenous Peoples
    • Climate Change and Disaster Risk Resilience >
      • Adaptation Planning
      • Nature-based Solutions
    • Urban Development
    • Sustainable Development Goals
    • Strategic Environmental Assessment
    • Regulatory Impact Assessment
    • Methods in Impact Assessment
  • Community
    • Membership Directory
    • News
    • Policy Submissions >
      • Submissions
    • Courses
  • 2025 Calendar Year Membership Subscription Renewal