The economic value of reseeding paua (abalone) on the Chatham Islands

Abstract

A paua (abalone) reseeding project on the Chatham Islands is evaluated to find the economic value of the project. The project is evaluated from two accounting stances. First, as a private investment by the paua ITO (individual transferable quota) holders on the Island. Second, the project is evaluated as a regional cost benefit analysis to evaluate the effect on the Chatham Islands. The net present value is the primary decision variable with internal rate of return, cash flow and accumulated capital being used as secondary criteria. The benefits and costs for twenty years are aggregated for the project. Subjective probability distributions are estimated for uncertain variables and the aggregation is done using a Monte Carlo simulation to approximate the distributions associated with the decision variables. The model returned high values for the decision variables, suggesting that the project is economically viable both from private and regional accounting stances.