A Social Cost Benefit Analysis

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WALNUTS AUSTRALIA PROJECT A social Cost-Benefit analysis investigating the implement of a walnut plantation in Tasmania, Australia Semester 2 - 2013 ECON3220 BENEFIT-COST ANALYSIS FOR BUSINESS Table of contents Executive summary 3 I. Introduction 4 II. Methodology 5 a) Benefit-Cost Analysis (BCA) 5 b) Decision criteria 5 c) Key variables 6 d) Assumptions 6 III. Analysis 7 1. Results summary 7 a) Project Analysis 7 b) Private Analysis 8 c) Efficiency Analysis 8 d) Referent Group Analysis 8 2. Sensitivity and Risk Analysis 9 a) Discount rates 9 b) Riparian buffer zone 10 c) Opportunity costs of land & labour 11 d) Walnut price 12 3. Joint Analysis 13 Conclusions and Recommendations 14 EXECUTIVE SUMMARY In…show more content…
The last sections concern about the uncertainties in multiple inputs. The project ends up to be undeniably risky where in optimistic cases, the project is favourable to both the social and private stakeholders; but in pessimistic cases, the detriment could become terribly worse. The ultimate choice then depends on the attitude towards risk of the decision maker but generally, further investigations on different aspects of the project should be implemented in order to make an accurate decision. I. INTRODUCTION The report advises on the possibility of the project related to gains and losses from which many parties may suffer such as the Australian government, Tasmanian government and labour, WAL, etc. Those benefits and costs are particularly different among stakeholders. Generally, the company wants to take advantage of an ideal climate and the currently developing walnut industry to build up a plantation zone for walnut trees in eastern Tasmania which lasts for 20 years. This WAL’s new project is expected to achieve its full capacity after four years operating and to earn extra revenue from timber at the end of its life. WAL supports the project as it can cover partly the total amount of Australia’s import walnuts which is as large as 4,000 tonnes of kernels per year. The Australian government prefers to take this into account along with revenues from tax and subsidies spending in order to allow a subsidised
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