Economic analysis is often a key input of decision-making on development projects that affect the environment. However, the quality and rigor of economic analysis can vary substantially, even across cases with similar core features, including market benefits and cost implications. 

In the August issue of the Resource Management Journal, Director Kevin Counsell illustrates this variation by discussing the economic input of two recent court cases for the planning approval of coal mines: a proposed mine in the Galilee Basin in Queensland, Australia, and one at Te Kuha on the West Coast of New Zealand’s South Island. For each mine, expert evidence on the positive economic benefits of the mine was presented, which the relevant court balanced against each mine’s negative environmental impact on nearby areas with high ecological values. 

The economic analysis used for the proposed Galilee mine was considerably more rigorous, built on stronger conceptual economic foundations, and supported by a consensus in the economics literature compared to that applied for the Te Kuha mine. Mr. Counsell concludes that New Zealand can learn from the approach used in Australia by better incorporating more robust economic analysis into environmental jurisprudence, and that this would ultimately improve the quality of decision-making.