Strengthening the integrity of the forestry supply chain: Licensing and registration - Regulatory Impact Assessment

Abstract

The nature, and scale, of the costs and benefits of this proposal have been assessed by Dr Robert Radics, forest economist with MPI. Section 6.2.1 provides the detailed analysis prepared by Dr Radics, and the sensitivity analysis he has undertaken around the costs and benefits. The analysis indicates that registration and licensing has significant benefits for forest growers through better forest and wood management ($20 million per annum). The additional benefits to growers, through improved performance and wood quality represent an increased benefit for New Zealand as a whole. The Net Present Value (NPV) of these benefits to forest growers, over five years, is $73million. Other stakeholder groups, despite registration and licensing costs, have a net benefit. The annual net benefit to New Zealand was calculated at $23 million. This figure is an average over time, and it does not incorporate the upfront costs of investment in the new system, nor the expected increase in benefits over time. The total NPV for the New Zealand economy is $103 million in five years and $179 million in ten years. The assessment is based on the Treasury Cost Benefit Analysis guidelines, and applied a 6% real discount rate.