Valuing the benefits of public goods to meet the requirements of the Local Government Act in New Zealand

Abstract

The Local Government Amendment Act (No 3) requires Local Authorities to consider the distribution benefits from publicly provided services in relation to their expenditure and financing. This is feasible in the case of private goods where beneficiaries can be easily identified but is much more problematic with public goods where beneficiaries cannot easily be identified. The Local Government Act states that where expenditure is independent of the number of beneficiaries, generates benefits that do not accrue to identifiable persons or groups and generates benefits to the community generally, then: the costs of the expenditure should be allocated in a manner consistent with economic efficiency and appropriate to the manner and appropriate to the nature and distribution of the benefits generated ... ' Local Government Amendment Act (No3) 1996 Part VIlA. This paper reviews the economic methodologies available to evaluate benefits provided by public services. The paper uses Unit Day Values (UDV) to estimate the total benefit of Auckland Regional Parks.