VEAC 202945 Report Text.Indd

APPENDIX 1 River Red Gum Forests Investigation – Socio-Economic Assessment Final Report Prepared for the Victorian Environmental Assessment Council 8 Nicholson St East Melbourne 3002 by Gillespie Economics DCA Economics and Environmental & Resource Economics May 2008 Final Report 109 Acknowledgements The consultants acknowledge the assistance of several people in preparing this report. APPENDIX 1 VEAC staff and Council members provided information and feedback throughout the two stages of this study. In particular, Paul Peake, Simon Ransome, James Fitzsimons, Fred Cumming and Kaye Follett provided considerable assistance, data and advice. Simon Ransome took responsibility for assisting in the editing of the fi nal report and collating the comments of other VEAC staff, including CEO Joan Phillips, and members of VEAC’s Council. Members of the water group within DSE gave up some of their scarce time to assist the consultants on questions of water markets, water allocation and other related matters. Their help was important to our understanding of the complexity of the issues involved. The consultants received ready cooperation from all the participants in the survey of the River Red Gum timber industry. The participants provided physical and fi nancial data which the consultants have used in benefi t cost analysis to assess the economic contribution of the industry and in regional impact analysis to assess the social impacts of VEAC recommendations, particularly in terms of regional incomes and employment. The consultants also thank timber producers and DSE staff for showing them through the Gunbower and Barmah forests. To those we have omitted – our apologies. 110 River Red Gum Forests Investigation July 2008 Contents 1 INTRODUCTION 114 2 BENEFIT COST ANALYSIS 114 2.1 Estimating the Market-Based Values Associated with Forest Use 115 2.1.1 The Timber Industry 115 2.1.2 Grazing 115 2.2 Estimating the Non-Market Environmental Values Associated with Forest Protection 116 2.2.1 Context 116 2.2.2 Previous studies employing non-market valuation 116 2.2.3 Other estimates of the value of national parks 116 2.2.4 Choice Modelling 117 2.2.5 Results for River Red Gum forests 117 2.2.6 Application to Benefi t Cost Analysis 118 2.3 Assumptions for Environmental Outcomes 118 2.3.1 Demographic data 118 2.4 Estimating the Values Associated with Wetland Protection and Duck Hunting 119 2.5 Tourism and Recreation 120 2.5.1 Additional park management costs 121 2.6 Protecting Riparian Areas 122 2.7 Maintaining Viable Rural Communities 123 2.8 An Assessment of VEAC Recommendations 124 2.8.1 Distribution of benefi ts 124 2.8.2 Conclusions to BCA 125 3 REGIONAL IMPACT ANALYSIS 125 3.1 Introduction 125 3.2 La Trobe Study of the Economic Contribution of the Timber Industry 125 3.3 Regional Economic Impact Assessment 127 3.3.1 Introduction 127 3.3.2 Input Output Table and Economic Structure of the Region 127 3.4 Regional Economic Effects of the River Red Gum Timber Industry 132 3.5 Regional Economic Impacts of Reduction in Duck Hunting 133 3.6 Regional Economic Impacts of Restrictions on Forest Grazing 134 3.6.1 Barmah Forest 134 3.6.2 Riverside Reserves and Other Public Land Grazing 134 3.7 Regional Economic Impacts of Additional Tourism 135 3.8 Summary of Regional Impacts 137 3.9 Cities and Towns Affected 137 3.9.1 Introduction 137 3.9.2 Gannawarra (S) (SLA) 137 3.9.3 Campaspe (S) - Echuca (SLA) 138 3.9.4 Moira (S) West (SLA) 138 3.9.5 Greater Shepparton City Part A 140 3.10 Impacts on Individuals 140 4 MITIGATION MEASURES 141 5 REFERENCES 142 Final Report 111 APPENDICES Appendix A Derivation of Assumptions for Environmental Outcomes Appendix B Timber Survey Questionnaire Appendix C Assumptions for Timber Yields Under Various Scenarios APPENDIX 1 Appendix D Summary of Grazing Impacts of VEAC Recommendations Appendix E Comparison of Socio-Economic Data for Choice Modelling Samples with Australian Bureau of Census (ABS) Data Appendix F Wetland Protection Appendix G Duck Hunting Appendix H Estimating the Value of Additional Visitation for the New RRG National Parks Appendix I Implementation of ECC Box-Ironbark Recommendations Appendix J Summary of DSE and Parks Victoria Expenditure on Park Management Appendix K Prior Studies of the Economic Value of Healthy Rivers Appendix L Estimating the Value of Riparian Areas Appendix M Willingness to Pay for Maintaining Rural Communities Appendix N Generation of Regional Input-Output Tables (GRIT) Note: Appendices to this report are not included in the hard copy version of the VEAC Final Report. They are available at VEAC’s website www.veac.vic.gov.au 112 River Red Gum Forests Investigation July 2008 TABLES Table 1: Timber Licence Volumes – 2006/2007 Allocations 115 Table 2: Attributes and their Levels for River Red Gum Forests 117 Table 3: Selection of Samples 117 Table 4: Implicit Price Estimates for River Red Gums 118 Table 5: Assumptions for Environmental Outcomes 118 Table 6: Demographic Data 119 Table 7: Environmental Attributes for the Goulburn River 123 Table 8: Undiscounted Benefi ts and Costs of VEAC Recommendations 124 Table 9: Summary of the Benefi t Cost Analysis 124 Table 10: Distribution of Environmental Benefi ts 124 Table 11: Aggregated Transactions Table: Regional Economy 2006 ($’000) 128 Table 12: Relative Magnitude of Entire Timber Industry Sectors 128 Table 13: Annual Regional Economic Effects of the River Red Gum Timber Industry 132 Table 14: Relative Magnitude of the River Red Gum Timber Industry 132 Table 15: Sectoral Distribution of Total Regional Employment Impacts for the Timber Industry 133 Table 16: Average Annual Duck Hunter Expenditure 133 Table 17: Annual Regional Economic Impacts of Displaced Duck Hunters 133 Table 18: Sectoral Distribution of Total Regional Employment Impacts for Duck Hunting 134 Table 19: Annual Regional Economic Impacts of Displaced Grazing in the Barmah Forest 134 Table 20: Annual Regional Economic Impacts of Displaced Grazing in Other Public Land 135 Table 21: Annual Regional Economic Impacts of Additional Park Management Expenditure 135 Table 22: Annual Regional Economic Impacts of Additional 48,000 Visitors 135 Table 23: Sectoral Distribution of Total Regional Employment Impacts of Park Management 136 Table 24: Sectoral Distribution of Total Regional Employment Impacts of Visitors 136 Table 25: Summary of Regional Impacts 137 FIGURES Figure 1: Tourism Victoria’s Campaign Regions 120 Figure 2: Summary of Aggregated Sectors: Regional Economy (2006) 127 Figure 3: Sectoral Distribution of Gross Regional Output and Value-added ($’000) 129 Figure 4: Sectoral Distribution of Gross Regional Income ($’000) and Employment (no.) 130 Figure 5: Sectoral Distribution of Imports and Exports ($’000) 131 Figure 6: Gannawarra SLA Employment by Industry 139 Figure 7: Campaspe (S) – Echuca Employment by Industry 139 Figure 8: Moira (S) West (SLA) Employment by Industry 139 Figure 9: Employment for Greater Shepparton City Part A Employment by Industry 140 Final Report 113 In this analysis the BCA is State-wide – benefi ts and costs are 1 INTRODUCTION considered from the viewpoint of all Victorians – while the regional impact analysis is confi ned to VEAC’s study area. The purpose of this report is to outline a social and economic assessment of VEAC’s fi nal recommendations for the River Red A number of submissions to VEAC confused the two methods of Gum Forests (RRG) Investigation. analysis so the consultants have attempted to clarify the differences APPENDIX 1 between the methods in a number of places in this report. Background information for this report has appeared in the VEAC River Red Gum Forests Investigation Discussion Paper, With respect to the regional economic impact framework published in October 2006, and the Draft Proposals Paper (DPP) used here, it should be noted that many proposals, whether for Public Comment, published in July 2007. The Discussion Paper economically benefi cial in net terms or not, will provide an includes comprehensive treatment of the Environmental, Social economic stimulus to a region. For instance, the Exxon Valdez oil and Economic Setting; the Public Land Use Framework; Uses of spill generated signifi cant amounts of economic activity, however, Public Land; and Discussion of Issues. The Draft Proposals Paper it could not be argued that the spill was socially desirable. included a description of VEAC’s draft recommendations. Unproductive job creation schemes, such as ‘digging holes and fi lling them in again’ would be seen to create jobs in a regional The outcomes sought through the report are: analysis but, more sensibly, would show net losses in a BCA. (a) an assessment of the costs and benefi ts of VEAC’s Hence while RIA can be used to estimate changes in regional recommendations and how those costs and benefi ts economic activity (value-added, output, income and employment) are distributed; associated with alternative policy scenarios, unlike the benefi t cost analysis framework there are no guidelines for interpreting whether (b) an assessment of the social implications of VEAC’s or not an increase or decrease in economic activity is economically recommendations, with particular attention to the viability desirable. The technique can however be useful for social planning of small towns, including those dependent on timber; purposes, particularly where the activities affected represent a (c) suggestions on measures that could be adopted to either signifi cant proportion of the regional economy. strengthen the positive, or mitigate the negative effects of the recommendations; and (d) a description of a survey of timber industry businesses to 2 BENEFIT COST ANALYSIS quantify key factors (including employment, product markets, value adding and trends, and production from New South The Victorian River Red Gum (RRG) forests, wetlands and Wales) required to achieve outcomes (a) to (c) above.

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