An economic analysis of large scale land development on Hindon Station, Otago

Abstract

This thesis is concerned with the economics of three phases of development, development by the Department of Lands and Survey, post settlement by the successful applicants and integrated departmental and post settlement development. Project evaluation techniques will be used to evaluate each of these aspects of land development and settlement on the Hindon development block, Otago. The results from the case study of development will be used to test three basic hypotheses; (1 ) that large scale land development by the Department of Lands and Survey is profitable to both the Department and the nation; ( 2) that settlement and subsequent development by the successful applicant is profitable to both the applicant and the nation, and (3) that the integrated departmental and post settlement development is profitable for the nation.

The case study area will be described in Chapter 2 together with the derivation of the pre-development level of net income. The method of development will be outlined in Chapter 3 and the process of settlement and post settlement development will be outlined in Chapter 4. The hypotheses presented could have tested by using any one of the three basic criteria outlined in Chapter 5, but because investment in agricultural development involves the use of scarce resources which have alternative uses, it is therefore necessary to derive the theoretical basis for obtaining optimum resource allocation over time. This theoretical framework will be presented in Chapter 5. The problems associated with the evaluation of development projects will be outlined in Chapter 6. The departmental development phase is analysed in Chapter 7 and the results are used to test the first hypothesis presented. Settlement and post settlement development on a typical farm unit presented and analysed in Chapter 8 and the results used to test the second hypothesis. Integrated departmental and post settlement development is analysed in Chapter 9 and the results used to test the third hypothesis. The analysis was restricted to the primary costs and returns of development because of the difficulty of measuring secondary and tertiary costs and returns in a projection study.

The prices used the study are a synthesis of those experienced in the Otago district between 1959/60 and 1964/65. A single valued range of prices is used in Chapter 7, 8 in the beginning of Chapter 9. In section 9.5.4 a range of prices is introduced to examine the stability of the results under variations in the price levels. The main conclusions and recommendations of the study will be presented in Chapter 10.

Agricultural development on Hindon and on surrounding properties has proved that rapid increases in the level of production are technically possible, but until this study was undertaken little was known about the economies of such development.