Our Economics team use a range of economic techniques such as:
Benefit Cost Analysis
A Benefit Cost Analysis (BCA) essentially examines all the economic benefits and costs of a particular project or option, from the point of view of society as a whole. The flow of benefits and costs is taken over a particular time period, and is expressed in the form of a Net Present Value of benefits minus costs– the higher the value, the greater the benefit. The BCA of Proposed Changes to the 5 Star Standards is an example of this technique.
Triple Bottom Line assessment
Triple Bottom Line assessment is used to examine the economic, social and environmental effects of a project or option, and ensure that these are all considered in decision-making. It shifts the focus from purely a financial bottom line to encompass environmental and social outcomes in line with sustainability, hence the term ‘Triple Bottom Line’.
Triple Bottom Line assessment can involve techniques such as Benefit Cost Analysis and Multi Criteria Analysis (where options are ranked against a range of criteria, using technical expertise). The Sustainability Assessment for the Wood and Water Project is an example of Triple Bottom Line assessment.
Non-market valuation
Non-market valuation encompasses a range of techniques used to place a value on items that are not normally valued or traded in the market place. It can be applied to resources such as public parks, rivers, and clean air, and can be extended to policies, such as water restrictions. Non-market valuation was used to estimate The Economic Value of Victoria’s Rivers.
Specific techniques used include:
Contingent valuation – a survey technique whereby respondents are asked what they would be willing to pay to obtain a particular attribute, such as a new national park. Whilst it may seem simple, the way the question is designed is critical to avoid influencing the results.
Choice modeling – a survey technique whereby respondents are given several different options with different levels of attributes (such as price, convenience, environmental benefit), and must choose between the options. This allows calculation of willingness to pay without the question being asked directly of the respondent.
Travel cost surveying – this technique is based on the theory that what people pay to travel to a particular area is an indication of the area’s value to them. A survey of visitors can be used to estimate this value.
Rapid Appraisal
This technique was pioneered by URS as a means of undertaking Benefit Cost Analysis where time and information are scarce. It has been applied to issues such as flood management and land use planning. The Tool to Prioritise Flood Mitigation Works is an example of this technique.
Life Cycle Analysis
Life Cycle Analysis (LCA), also known as cradle-to-grave analysis, is used to establish the environmental impact of a product or action over its lifetime. URS Economics uses specialized LCA software to calculate environmental impacts such as carbon emissions and toxin levels. LCA has been used to compare the environmental impact of things such as: using a ceramic cup versus a polystyrene coffee cup, working from home versus working in the office, and reading the newspaper online versus reading the paper version.
Input-output modeling
Input-output modeling is used to predict the impact of a project or event on a particular economy. It is particularly useful for understanding the impacts on smaller, regional economies. Essentially it involves an examination of what inputs a project requires (employees, capital, etc), where these will be obtained from (local region, national), what the outputs from the project will be (goods and services) and where they will be sold. This allows for an understanding of how the project is linked in to the regional economy, and how it affects indicators such as regional employment and output. Input-output modeling was used to estimate the Economic Impact of Nowingi Long Term Containment Facility.
Computerised General Equilibrium Modeling
Computerised General Equilibrium Modeling (CGE modeling) is a more sophisticated adaptation of input-output modeling. It is used to determine the impact of a particular project on the state and/or national economy. URS Economics uses well-established and respected CGE models to establish predictions of the change in Gross Domestic Product, real household consumption, employment and other indicators as a result of a project going ahead. CGE modeling is often used for projects where the impacts are expected to be large, such as for major mining proposals.