APPENDIX I List Of Submissions - Victorian Environmental ...

Consistent with widely accepted practice in benefit cost analysis, we have not considered
multiplier effects for any of the activities compared. Any industry output or employment
leads to ‘flow-on’ or ‘multiplier’ effects and estimates of such effects generally serve only
to mislead or confuse.
The study considers in some detail the evaluation of ‘non-market’ or ‘unpriced’ social
benefits and costs. The dollar value of non-market benefits and costs is intrinsically
difficult to estimate as they involve goods and services that are not traded in markets in the
usual way. These ‘hard to value’ items include recreation, cultural heritage, scenic values,
and species preservation.
Despite the general availability of techniques for valuing ‘hard to measure’ items, their
application is expensive, requiring substantial surveys and effort to collect the necessary
data. Such surveys were beyond the scope of this study given the range of environmental
values to be covered and the time and funds available. Instead, the consultants collated
environmental economics research estimates from Australia, USA and New Zealand.
Environment
In evaluating the environmental and recreational benefits, what we would ideally like to
measure in dollar terms is the net addition to the welfare of Victorians that is expected to
be brought about by the recommendations. Many of the forms of recreation that may
occur in areas being considered in the Council’s draft proposals are readily available
elsewhere in the State, or would not be significantly affected on the candidate rivers even if
the recommendations were not adopted. To simplify the analysis and reduce the risk of
over-stating environmental and recreational values, the consultants have attempted to
exclude recreational activities whose resource requirements are readily met, such as
bushwalking, camping, wildlife hunting and most forms of flat water boating. That is, we
have assumed that the Council’s draft proposals will generate no net benefits in these
areas.
Instead, we have focussed on valuing the special environmental and recreational
characteristics that were used by the Council as selection criteria for the candidate heritage
rivers. We have assumed that the Council has accurately identified the set of river
segments having the highest standards for these characteristics in the State, that the
segments are individually unique, and that there are no ‘next best’ alternatives for
providing the values identified on the segments.
The assumption that the segments are unique and that there are no next best alternatives
to providing the values to be found on them leads to over-stating of the environmental
benefits. However, the use of ‘willingness to pay’ rather than ‘willingness to accept’
measures of dollar value leads to under-estimation of the values. The latter criterion
commonly gives dollar values that are three to five times those obtained by the former
criterion.
It is also assumed that the environmental characteristics identified by the Council will be
under immediate threat if the draft proposals are not followed. In most instances in
practice, the values would only be threatened over a period of time, therefore this is
another source of over-estimation. Off-setting this effect is the fact that we were also not
207