Correction to Cost Benefit Analysis – America’s Cup

On: 21 December 2017

Market Economics has advised the Ministry of Business, Innovation and Employment (MBIE) of errors to the cost-benefit analysis in their report “36th America’s Cup: High Level Economic Assessment Evaluation” which MBIE commissioned.

Market Economics advises the error does not affect their Economic Impact estimates for hosting the regatta in Auckland:

  • From 2018-2021 provides between $0.6 - $1.0 billion in value add to New Zealand’s economy and an employment boost of between 4,700 and 8,300. The range reflects different assumptions around the number of syndicates competing, visiting super yachts, international tourists and the cost of hosting.
  • Impacts positively on sectors like services, manufacturing (mainly around boat building and super yacht refits) and tourism, including food, retailing and accommodation.

Their miscalculation affects the Cost Benefit Analysis in the report as follows:

Scenario

Original

Revised

High

1.8

1.10

Medium

1.2

0.997*

Low

1.6

1.14


*Number has not been rounded.  

In simple terms, the cost benefit ratio is normally the total benefits divided by the total costs (e.g. construction cost plus costs to deliver the goods and services).

However, Market Economics had erroneously divided net benefits (new spending less the costs to deliver the goods and services) by total construction costs.

This has now been corrected in the report and an updated version can be found here.

MBIE appreciates the pragmatic approach that Market Economics took working with us once the error was identified.

[image] RSS icon RSS feed

Keep up to date with the latest news from MBIE by subscribing to our RSS feed.

Subscribe now

[icon] Newspaper

Media contacts

MBIE

Phone: 027 442 2141

Email: media@mbie.govt.nz

Workplace Health and Safety

Phone: 021 823 007

Email:
media@worksafe.govt.nz