maori commercial aquaculture settlement - Ministry of Fisheries

• that the same discount rate can be applied
to all aquaculture operations and the
parameters for estimating the discount rate
for marine farms can be observed in the
market
• that compliance with coastal permit
conditions is ongoing, and therefore coastal
permits are renewable into perpetuity and
cash flows are forecast into perpetuity.
70. The following additional assumptions relate to
the valuation required for the financial equivalent
method:
• that all valuations for the purposes of
estimating financial equivalent will be as at 1
January 2013
• that all coastal permits for a particular
species within a region or harbour will share
the same, or equivalent, terms and
conditions relating to monitoring, renewal
term, and discharge, but that if significant
variations are found within a region or
harbour, these will be dealt with in the
selection of reference sites
• that the “delphi method” is a suitable
process to identify reference sites,
standardise data, and identify missing
information, such as site productivity,
improvement values, and operating costs11 • that the relative value of any given site to a
reference site can be established using
expert input
• that relative site productivity can be used
in most instances as a proxy for site value
• that the individual value of any coastal
permit space cannot be negative, because
10
the settlement beneficiary cannot owe the
Crown money
• that extrapolation of values of key
reference sites will provide reliable estimates
of the aggregate values required for
estimating the financial equivalent and
assessing the average current value of
space in the part of the coastal marine area
concerned.
Discussion
71. The valuation methodology has been peer
reviewed by PwC. The peer review considers the
value of a coastal permit should be benchmarked
to actual transactions involving the
purchase and sale of coastal permits with similar
characteristics. However, PwC notes that this
approach is not practical at present because
there are insufficient data on such transactions
in the public domain.
72. PwC considers that the valuation
methodology is a conceptually appropriate
approach for the valuation of coastal permits.
However, PwC is of the opinion that there will
be challenges in applying the valuation
methodology in practice. PwC has identified a
number of areas where the valuation
methodology could be enhanced and simplified.
PwC concluded that the valuation methodology
is an appropriate approach to value coastal
permits given the limited transaction data
currently available. The recommendations
arising from the peer review have been reviewed
and considered by LECG in the proposed
valuation methodology.
11.The “delphi method” is based on a structured process for collecting and refining knowledge from a group of experts by means of a
series of questionnaires interspersed with controlled opinion feedback.