New Zealand Ministry for the Environment
SGS analysis gives green light to Strategic Planning Act.
New Zealand’s Central Government is in the process of replacing the Resource Management Act 1991 (RMA) with new legislation to better protect and restore the natural environment, support development within biophysical limits, improve integration and recognition of Māori in decision making, adapt to climate risks, and improve overall planning system efficiency.
The core legislation replacing the RMA will be the Natural and Built Environment Act (NBA). The NBA will consolidate over 100 RMA plans into 14 Natural and Built Environment Plans (NBA Plans). Supplementary legislation to support the NBA includes the Strategic Planning Act (SPA). Under the SPA, 14 regional spatial strategies (RSSs) are to be developed which will align with the 14 NBA plans.
NBA Plans which aim to give effect to national policies, filtered through a regional lens and taking into account distinctive local factors, could be delivered without the SPA and RSSs. Consequentially, a question arose as to what additional welfare contribution the SPA and RSSs might make and at what cost. SGS was engaged to provide evidence and advice on this point, specifically, the type and magnitude of impacts generated by the SPA.
SGS analysis supported the decision to proceed with the SPA, as it provides a means of mitigating the risk of non-achievement or underachievement of the benefits expected from NBA Plans. The benefits of the SPA and RSSs were assessed to outweigh the costs of implementing and managing the reform program.
Our cost-benefit analysis (CBA) took, as its starting point, the benefits expected from the successful implementation of the NBA. Benefits included environmental safeguarding, improved housing affordability, urban productivity, efficient infrastructure provision, climate resilient urban development and reduced emissions, and others. The benefits were estimated by SGS and/or gathered from previous studies, and were apprised over a 30-year time horizon.
The welfare gain expected from implementing the SPA and RSSs was estimated as one per cent of this notional present value of all benefits. This one per cent was a proxy for willingness to pay (WTP) for greater assurance of achieving the benefits of the NBA. The value of one per cent was derived from a literature review of insurance and financial market tools, such as corporations knowingly incurring a cost to hedge against an investment portfolio not performing as planned. There was a degree of uncertainty with this approach, and sensitivity testing was undertaken to ensure that decision makers understood the impact of assumptions on the overall CBA outputs.