Quantifying Benefits and Costs under the Resource Management Act: Lessons from Commerce Commission Decision-Making

Wed May 22 16:24:38 EDT 2013
By James Mellsop and Kevin Counsell

Section 32 of New Zealand's Resource Management Act 1991 (RMA) requires an evaluation of benefits and costs before certain proposals, such as local or regional plans, are prepared by resource management decision-makers. To date there has been no requirement for those benefits and costs to be quantified; however, that would change if proposed amendments to section 32 are passed into legislation. The Resource Management Reform Bill would, among other changes, amend section 32 to require the decision-maker to, "if practicable," quantify the benefits and costs of the effects anticipated from the proposal being evaluated. While some have expressed concerns that the complexity of quantifying benefits and costs will limit the use of quantification in section 32 evaluations, this NERA paper points out that there already is another high-stakes decision-making regime in New Zealand involving quantification of benefits and costs to the degree practicable -- the regime operated by the Commerce Commission under the Commerce Act 1986. Authors James Mellsop and Kevin Counsell argue that the proposed amendments to section 32 of the RMA, if they are implemented, will increase the rigor and objectivity of RMA decision-making. Although the changes might increase complexity, the Commerce Commission's approach provides comfort that the quantification of benefits and costs can be achieved in a manner that is transparent, robust, and tractable. This paper outlines how the Commerce Commission's approach to quantification works, and explores the implications for section 32 of the RMA.