bluuebunny/crossref_metadata_2025 huggingface dataset:
Water, Water Somewhere: The Value of Water in a Drought-Prone Farming Region
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Aitken Andrew
Published: April 2018

Water is critical for agriculture, yet surprisingly few studies internationally have analysed the value placed on water in specific farming contexts. We do so using a rich longitudinal dataset for the Mackenzie District (Canterbury, New Zealand) over nineteen years, enabling us to extract the value placed by farmers on long-term access to irrigated water. New Zealand has a system of water consents under the Resource Management Act (RMA) that enables farmers with consents to extract specified quantities of water for agricultural purposes. Some water is extracted through large-scale irrigation infrastructure and other flows by more localised means; the RMA and the water consents themselves are a critical legal infrastructure underpinning farming. Using panel methods, we estimate property sale price and assessed value as a function of the size of the farm's water right (if it has one), farm characteristics, and the water right interacted with farm characteristics to determine how the value of a water consent varies according to local conditions. We find that flatter areas and areas with poorly draining soils benefit most from irrigation, possibly because the water is retained for longer on these properties. Drier areas appear to benefit more from irrigation than do areas with higher rainfall. Farms that are situated close to towns derive especially strong benefits from irrigation since these properties are most likely to have potential water-intensive land uses such as dairying and cropping that require access to processing facilities and/or an urban labour pool.
The Long-Run Impact of New Zealand's Structural Reform on Local Communities
Authors:   Motu Economic and Public Policy Research, Stillman Steve , Velamuri Malathi
Published: April 2018

New Zealand underwent a period of comprehensive market-oriented economic reforms from 1984-93. In this paper, we use data from the 1986, 1991, 1996 and 2001 Censuses to examine the long-run impact that these reforms had on local communities. We analyse the adjustment process in 140 local labour market areas (LMAs) by creating three measures of the impact of structural reform on local communities - an employment-based measure, a population measure and a housing price measure - and examine the persistence of these shocks over time. We find that communities which experienced smaller employment shocks have higher employment rates, higher average incomes and a more skilled workforce in the medium and long-term. Population shocks also have positive, sizeable and persistent effect on average incomes and population in the future. Overall, the initial impacts of the reforms undertaken in New Zealand on local communities appear to still endure more than a decade later.
Labour Productivity in Auckland Firms
Authors:   Motu Economic and Public Policy Research, Maré David
Published: April 2018

This paper examines labour productivity in Auckland, New Zealand's largest city, using microdata from Statistics New Zealand's Prototype Longitudinal Business Database. It documents a sizeable productivity premium in Auckland, around half of which is due to industry composition. There is a cross sectional correlation between productivity and employment density, reflecting differences in both physical productivity and prices. This correlation is evident both within Auckland, and comparing Auckland with other areas. The relationship between changes in density and changes in productivity is less strong. The relationship between productivity and overall or own-industry employment density varies across industries, suggesting that the nature and extent of agglomeration benefits varies. Overall, localisation effects appear stronger than urbanisation, with productivity being more strongly related to own-industry density than to overall density.
Storage Under Backwardation: A Direct Test of the Wright-Williams Conjecture
Authors:   Motu Economic and Public Policy Research, Coleman Andrew
Published: April 2018

Commodities are often stored when the spot price exceeds the future price in a central market. Wright and Williams conjectured that inventories are held in locations far from the central market on these occasions. In these locations the spot price is lower than the price for forward delivery because transport costs are temporarily high. This hypothesis has not been directly tested, because prices for forward delivery are not normally available at non-central locations. This paper uses an example where these prices exist to test the hypothesis. The evidence, from the late nineteenth century corn markets in Chicago and New York, strongly supports the conjecture. Length: 30 pages
Tax, Credit Constraints, and the Big Costs of Small Inflation
Authors:   Motu Economic and Public Policy Research, Coleman Andrew
Published: April 2018

This paper develops an overlapping generations model incorporating credit constraints, owner-occupier and rental sectors, and detailed tax regulations to examine how the interaction of inflation and the tax system affect the housing market. It shows that even modest rates of inflation can have very large effects on the home-ownership rates of young households, particularly at low real interest rates. This occurs even if there is a large supply response in the quantity of housing. The model suggests that the welfare costs of inflation could be ameliorated by exempting the inflation component of interest payments from income tax.
Who Pays What for Primary Health Care? Patterns and Determinants of the Fees Paid by Patients in a Mixed Public-Private Financing Model
Authors:   Motu Economic and Public Policy Research, Cumming Jackie , Stillman Steven , Poland Michelle
Published: April 2018

The New Zealand government introduced a Primary Health Care Strategy (PHCS) in 2001 aimed at improving access to primary health care, improving health, and reducing inequalities in health. The Strategy represented a substantive increase in health funding by government and a move from a targeted to a universal funding model. This paper uses representative national survey data to examine the distribution of fees paid for primary health care by different individuals under the mixed public-private financing model in place prior to the introduction of PHCS. Using multivariate regression analysis, we find that fees do vary, with people who might be expected to have greater needs paying less. However, apart from people with diabetes, there is no direct link between self-reported health status and fees paid. The findings indicate that a mixed public-private financing model can result in a fee structure which recognises differences across different population groups. The findings also provide a baseline against which changes in funding brought about by the PHCS can be evaluated.
China's Energy Economy: Technical Change, Factor Demand and Interfactor/Interfuel Substitution
Authors:   Motu Economic and Public Policy Research, Ma Hengyun , Oxley Les , Gibson John , Kim Bongguen
Published: April 2018

With its rapid economic growth, China's primary energy consumption has exceeded domestic energy production since 1994, leading to a substantial expansion in energy imports, particularly of oil. China's energy demand has an increasingly significant impact on global energy markets. In this paper Allen partial elasticities of factor and energy substitution, and price elasticities of energy demand, are calculated for China using a two-stage translog cost function approach. The results suggest that energy is substitutable with both capital and labour. Coal is significantly substitutable with electricity and complementary with diesel while gasoline and electricity are substitutable with diesel. China's energy intensity is increasing during the study period (1995-2004) and the major driver appears to be due to the increased use of energy intensive technology.
Testing for Energy Market Integration in China
Authors:   Motu Economic and Public Policy Research, Ma Hengyun , Oxley Les , Gibson John
Published: April 2018

This paper investigates energy market integration in China by employing univariate, and panel-based unit root tests and Granger causality tests applied to a new energy price data set. We identify price series that converge either to absolute or relative price parity. In addition we estimate the rates (speed) at which relative prices converge to their long-run values, and the direction of causality. The results show that gasoline and diesel markets are very well integrated as a whole; and that once some geographically isolated regions are excluded, we can regard the coal market as integrated; however, the electricity market is not well integrated. The estimated intercept terms are all very small and close to zero, such that most of the relative price series can be regarded as convergent to absolute price parity. The convergence rates vary little and are relatively short when compared internationally. A rich set of causal relationships are established many showing bi-directional causality between regional centres.
Chinas Energy Situation and Its Implications in the New Millennium
Authors:   Motu Economic and Public Policy Research, Ma Hengyun , Oxley Les , Gibson John
Published: April 2018

Many are interested in Chinas energy situation, however, numerous energy related issues in China still remain unanswered. For example, what are the potential forces driving energy demand and supply? Previous reviews focused only on fossil fuel based energy and ignored other important elements including renewable and clean energy sources. The work presented here is intended to fill this gap by bringing the research on fossil-based and renewable energy economic studies together and identifying the potential drivers behind both energy demand and supply to provide a complete picture of Chinas energy situation in the new millennium. This will be of interest to anyone concerned with the development of Chinas economy in general, and in particular with its energy economy.
Trans-Tasman Migration, Transnationalism and Economic Development in Australasia
Authors:   Motu Economic and Public Policy Research, Poot Jacques
Published: April 2018

This paper focuses on migration between Australia and New Zealand, which has exhibited a strong, but cyclical, net movement towards Australia since the late 1960s. A long-term historical perspective is taken. Trans-Tasman migration is also compared with inter-island migration within New Zealand. It is argued that differential economic development, driven by forces of globalisation, agglomeration and technological change, has been primarily responsible for the long-run changes in the distribution of population across the regions of Australasia. Asynchronous business cycles, demographic dynamics, perceptions, return migration and the high international mobility of New Zealanders (of whom one quarter of those aged 40-64 have lived abroad for a year or longer) are responsible for the short-run fluctuations. However, permanent and long-term migration is only a small fraction of total trans-Tasman population movement. Moreover, trans-Tasman migration has not offset New Zealands ability to recruit population through immigration. Over the last three decades, the outflow of half a million New Zealand citizens has been compensated by a net inflow of three-quarter million citizens from elsewhere. The number of New Zealanders in Australia is expected to continue to grow but the migration flows become increasingly diversified. One-third of the New Zealanders in Australia re-migrates within four years. Future trends will depend on New Zealands ability to boost productivity growth, the real cost of air travel, retirement migration and the impacts of climate change.
Agglomeration Elasticities in New Zealand
Authors:   Motu Economic and Public Policy Research, Maré David , Graham Daniel J.
Published: April 2018

This paper analyses the relationship between firms multi-factor productivity and the effective employment density of the areas where they operate. Quantifying these agglomeration elasticities is of central importance in the evaluation of the wider economic benefits of transport investments. We estimate agglomeration elasticities using the Statistics New Zealand prototype Longitudinal Business Database: a firm-level panel covering the period 1999 to 2006. We estimate that an area with 10 percent higher effective density has firms with productivity that is 0.69 percent higher, once we control for the industry specific production functions and sorting of more productive firms across industries and locations. We present separate estimates of agglomeration elasticities for specific industries and regions, and examine the interaction of agglomeration with capital, labour, and other inputs.
Variations in earnings growth: Evidence from earnings transitions in the NZ Linked Income Survey
Authors:   Motu Economic and Public Policy Research, Crawford Ron
Published: April 2018

This paper uses the New Zealand Linked Income Supplement (LIS) to investigate the annual transitions in hourly earnings of working age individuals over the years 1997 to 2004. I first construct transition matrices for annual changes in weekly and hourly earnings, to enable comparison with previous analyses using New Zealand tax data. I then estimate the determinants of annual changes in hourly earnings using OLS and quantile regressions. Differences in human capital are associated with differences in the rate of earnings growth. The results were broadly similar across the sub-periods 1997-2001 and 2001-2004.
Nutrient Trading in Lake Rotorua: Cost Sharing and Allowance Allocation.
Authors:   Motu Economic and Public Policy Research, Kerr Suzi , Lock Kelly
Published: April 2018

This paper clarifies how the benefits and costs of water quality improvements in Lake Rotorua are likely to be shared in the absence of a trading system; presents different perspectives on and principles for deciding how costs should be allocated; and then shows how different options for initially allocating nutrient allowances and achieving reductions in the cap over time conform with those cost-sharing principles. There is no correct answer to the question of who should pay. The best answer for Lake Rotorua will depend on what the community thinks is fair and what will be politically feasible. If the trading market does not operate efficiently, the way that allowances are allocated will affect the efficiency with which the catchment achieves its environmental goal. If the allocation of allowances provides significant capital it could also affect economic behaviour by loosening capital constraints that limit land development and mitigation.
The Labour Market Adjustment of Immigrants in New Zealand
Authors:   Motu Economic and Public Policy Research, Stillman Steven , Maré David
Published: April 2018

This paper uses data from the 19972007 New Zealand Income Survey to examine the economic performance of immigrants in New Zealand. Specifically, we use a synthetic cohort approach to examine how employment rates, hourly wages, annual income and occupations for immigrants compare to those for the NZ-born. We estimate the time pattern of adaptation in a semi-parametric manner for immigrants from different birth regions and with different qualifications. We also examine the possible impact of immigrants getting different returns to qualifications. The pattern of entry disadvantage followed by subsequent relative improvement is more pronounced for employment rates than for wage rates or occupational rank. It is also more pronounced for immigrants born in Asia. Outcomes for immigrants from the Pacific Islands never catch up with the NZ-born.
Spatial Effects of Mill Closures: Does Distance Matter?
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Young Chris
Published: April 2018

When small towns experience a major infrastructure shock, such as a mill closure, the effects can be devastating. We analyse the effects of two major freezing works closures in New Zealand, in Patea (1982) and Whakatu (1986). These two examples provide an interesting comparison: Whakatu is located close to a city, while Patea is relatively isolated. We describe the impacts of these shocks on population, employment and house values in each town, relative to two sets of comparators. These descriptions allow us to contrast long-run trends and adjustment dynamics resulting from the differing locations of both towns. We find that both towns experience negative population and employment impacts; however, consistent with benefits of a near-city location, the effects on Whakatu are mainly temporary, whereas the effects on Patea are more permanent. Population age-groups respond very differently to the shocks, in ways that are consistent with homeownership being a factor stifling migration responsiveness in the face of a shock. The results have implications for regional development policy choices with respect to infrastructure location and also for programmes designed to stimulate homeownership.
The long term effects of capital gains taxes in New Zealand
Authors:   Motu Economic and Public Policy Research, Coleman Andrew
Published: April 2018

This paper develops a model of the housing market incorporating a construction sector, a rental sector, and a housing demand sector to examine the long term consequences for the housing market of different types of capital gains taxes. The sector is based on an overlapping generations model of the economy that included a detailed representation of the credit constraints and tax regulations affecting households. The model suggests that capital gains taxes will raise rents, increase homeownership rates, rebalance the housing stock towards smaller houses, and increase the net foreign asset position. The implications for welfare are much less clear, however, particularly for young low income households that will face higher rents.
I Squeezed in and squeezed out: the effects of population ageing on the demand for housing
Authors:   Motu Economic and Public Policy Research, Coleman Andrew
Published: April 2018

This paper examines how increasing longevity affects the housing choices of working age and retired people using a heterogeneous agent overlapping generations model that incorporates owner-occupier and rental sectors, credit constraints, detailed tax regulations, and a housing supply sector. Increasing longevity is predicted to increase the fraction of older households living in large houses, and reduce home ownership rates among young people, who are squeezed out of the housing market because of higher taxes and house prices. The model suggests raising tax rates to provide pensions rather than relying on private provision can reduce the welfare of all agents, even those who are net beneficiaries over a lifetime, because they tighten credit constraints on agents when they are young.
Social capital and regional social infrastructure investment: Evidence from New Zealand
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Roskruge Matthew , McCann Philip , Poot Jacques
Published: April 2018

In this paper we link unique data on local social infrastructure expenditure with micro-level individual survey data of self-reported social capital measures of trust and participation in community activities. We use both probit and tobit models to estimate the impact of social infrastructure expenditure on social capital formation. Our results imply that the links between social capital, demographic characteristics, human capital, geography and public social infrastructure investment are rather more subtle and complex than much of the literature implies. While we find evidence in support of many of the hypothesized relationships discussed in the social capital literature, our results also suggest that the impact of public social infrastructure investment is affected by both selection effects and free rider processes.
Optimizing Voluntary Deforestation Policy in the Face of Adverse Selection and Costly Transfers
Authors:   Motu Economic and Public Policy Research, van Benthem Arthur , Kerr Suzi
Published: April 2018

As part of international climate change policy, voluntary opt-in programs to reduce emissions in unregulated sectors or countries have spurred considerable discussion. Since any regulator will make errors in predicting baselines, adverse selection will reduce efficiency since participants will self-select into the program. In contrast, pure subsidies lead to full participation but require large financial transfers; this is a particular challenge across countries. A global social planner facing costless transfers would choose such a subsidy to maximize efficiency. However, any actual policy needs to be individually rational for both the buying (industrialized) and selling (developing) country. We present a simple model to analyze this trade-off between adverse selection and infra-marginal transfers. The model leads to the following findings. First, extending the scale of voluntary programs both improves efficiency and reduces transfers. Second, the set of individually rational and Pareto efficient policies typically features a combination of credit discounting and stringent assigned baselines which reduce efficiency. Third, if the industrialized countries can be persuaded to be more generous, the feasible policy set can come close to the globally efficient policy to avoid deforestation..
Household Wealth and Saving in New Zealand: Evidence from the Longitudinal Survey of Family, Income and Employment
Authors:   Motu Economic and Public Policy Research, Le Trinh , Gibson John , Stillman Steven
Published: April 2018

This paper uses data from the Survey of Family, Income and Employment (SoFIE) to estimate household saving in New Zealand between 2004-2006. Comprehensive data on wealth is collected biannually in SoFIE and we calculate household saving by examining how wealth has changed over time. We find that even the most conservative estimate of household saving was at least 14% of gross income during this time period. On the other hand, the indirectly derived Household Income and Outlay Accounts (HIOA) indicate (net) household saving was -12.5% per year over the same period. We also find no evidence that capital gains in housing during this time period crowded out saving or that the composition of household wealth in New Zealand differed from that in other developed countries.
New Zealand Housing Markets: Just a Bit-Player in the A-League?
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Holmes Mark
Published: April 2018

House price trends in each of New Zealand and Australia are frequently discussed as national level developments. Sub-national developments are also important, especially where regions display idiosyncratic trends driven either by demand factors (differential income patterns) or by supply factors (geographical or regulatory restrictions). At a broader scale, it is possible that the New Zealand housing market, or a specific regional housing market (e.g. Auckland), is part of a broader Australasian housing market. If this were the case, New Zealand house prices would converge to a broadly stable ratio of house prices in Australia. One reason this could occur is if international macroeconomic and asset price trends dominate housing market outcomes. New Zealand authorities may then be relatively powerless to control the major real determinants of house prices through regulatory or other policies. We extract the major drivers of house prices at regional levels within New Zealand and Australia to examine the degree of differentiation across regional housing markets. While some minor regional differences are apparent, the evidence points to the dominance of a single trans-Tasman housing trend.
No Country for Old Men: a Note on the trans-Tasman Income Divide
Authors:   Motu Economic and Public Policy Research, Coleman Andrew , McDonald Hugh
Published: April 2018

Although much work has been done analysing the possible causes of the New Zealand-Australian income gap, to date there has been little analysis of the extent to which this gap differs by gender and age. Using New Zealand and Australian employment and census data we examine these differences and find that (1) over the last 25 years the incomes of New Zealand women have declined less rapidly than those of New Zealand men, relative to Australian incomes; (2) this poor relative performance of New Zealand males was felt most by those in middle age; and (3) the stronger relative income growth of New Zealand females appears to be largely driven by increased public sector wage growth, and as such, its long term sustainability is questionable.
A New Zealand Electricity Market Model: Assessment of the Effect of Climate Change on Electricity Production and Consumption.
Authors:   Motu Economic and Public Policy Research, Evans Lewis , Guthrie Greame , Lu Andrea
Published: April 2018

In this paper, we introduce an electricity market model and use it to explore the effect of climate change on electricity output and prices. It is calibrated to the New Zealand Electricity Market, and includes multiple generation fuels, uncertain fuel availability, and storage options. The model is formulated in continuous time, which mimics the many short trading periods that are common to electricity spot markets, while properly incorporating forward-looking generation decision making. Specifically, it is used to estimate the effects of changes that may arise in characteristics of fuels -water and gas- as a consequence of climate change and climate change policies. The model does this under the polar cases of a competitive market structure and monopoly. There are three key findings from the results. First, the results illustrate the importance of allowing for volatility and including management of storage in electricity market models. Second, they suggest that reductions in average hydro fuel availability will reduce welfare significantly. Increases in the volatility of hydro fuel availability will also affect welfare, but to a very small extent. Third, the value of reservoir expansion is sensitive to the distribution of hydro fuel availability. Finally, the effects of a carbon tax are also reported.
A Simple Repeat Sales House Price Index: Comparative Properties Under Alternative Data Generation Processes.
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Young Chris
Published: April 2018

We propose a new method to estimate a repeat-sales house price index. Our unbalanced panel method employs an OLS panel regression to estimate the (log) house price as a function of time fixed effects and house-specific fixed effects. Comparisons are made across three repeat-sales methods using actual data, and using simulated data with both stationary and non-stationary relative price innovations. The unbalanced panel method comprehensively utilises all sale information on a house rather than splitting sales into distinct pairs. It is the simplest of the methods to implement, and possesses superior properties to the other two methods under a wide range of data generation processes.
Anticipatory Effects of Rail Upgrades: Aucklands Western Line
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Chris Chris Young
Published: April 2018

We examine effects of urban passenger rail upgrades to Aucklands Western Line. The upgrades, and associated urban renewal projects, were announced in mid-2005. International experience indicates that the anticipated benefits of the upgrades should be factored into peoples location and pricing decisions on announcement. We utilise unit record house sale price data, using a new repeat-sales methodology, to measure house price appreciation, testing the hypothesis that price appreciation is affected by proximity to Western Line stations. We find statistically significant rises in values of houses located near stations upon announcement.
The Spatial Impact of Local Infrastructural Investment in New Zealand
Authors:   Motu Economic and Public Policy Research, Cochrane William , Grimes Arthur , McCann Phillip , Poot Jacques
Published: April 2018

In this paper we estimate the impact of local authority infrastructure spending in New Zealand using spatial econometric modelling, with the infrastructure spending itself endogenously determined. Utilizing data from the New Zealand Census and Local Authorities Finance data (1991-2008), aggregated to functional labour market areas, we formulate a simultaneous equations growth model of real income, population, land rent and public infrastructure investment. Estimation is conducted using a spatial 3SLS procedure. We find that an increase in local infrastructure spending increases population growth, real income and land values, but is itself endogenous and spatially correlated.
A State Housing Database: 1993-2009
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Stillman Steven , McDonald Hugh , Olssen Alex
Published: April 2018

The 1990s saw a significant sell-off of state houses in New Zealand, while the 2000s saw a material rebuilding of the state house inventory. We provide in-depth documentation of a rich spatially-defined dataset of the stock, acquisition and disposal of New Zealands state houses since the early 1990s. The paper examines the datasets reliability and outlines major national and regional state housing trends since 1993. We detail the levels and changes in density of state housing in New Zealands major urban areas, and relate these measures to the areas deprivation status. The richness and completeness of the dataset, and the fact that it covers two distinct policy periods (driven primarily by exogenous political preferences), means that it can provide a strong basis for detailed studies on the societal and individual impacts of homeownership and related matters. We discuss future research possibilities that utilise this dataset.
The International Effects of Climate Change on Agricultural Commodity Prices, and the Wider Effects on New Zealand
Authors:   Motu Economic and Public Policy Research, Stroombergen Adolf
Published: April 2018

This research takes a closer look at the effects of climate change on New Zealand agriculture and on the wider economy, including indirect international effects such as changes in the prices of goods exported from and imported to New Zealand, as well as carbon prices and policies. Economic loss from short term catastrophic events such floods and landslides is not investigated. Infometrics (2007) presented an initial quantitative analysis of some of the above issues. In this paper they update the part of that report that looked at the effect of climate change on agricultural commodity prices, by considering some new scenarios based on international research since 2007, and expand the time-period from 2025 to 2070.
Keeping it Together: Tracking Firms on New Zealands Longitudinal Business Database
Authors:   Motu Economic and Public Policy Research, Fabling Richard
Published: April 2018

Having good longitudinal identifiers is important in empirical microeconomics, since researchers often need to be able to observe the same unit over time to make causal inferences. However, firm identifiers in Statistics New Zealands Longitudinal Business Database can be broken by, among other things, changes in the legal status of the firm. This paper proposes a simple method for repairing broken firm identifiers, making use of existing plant migration data. We show that making such repairs materially reduces the apparent rate of business entry and exit, and allows real economic phenomena, such as small business incorporation, to be observed for the first time.
Homeownership and Social Capital in New Zealand
Authors:   Motu Economic and Public Policy Research, Roskruge Matthew , Grimes Arthur , McCann Philip , Poot Jacques
Published: April 2018

Does homeownership affect individual social capital and thereby influence local outcomes? Following DiPasquale and Glaeser, a body of literature suggests that homeownership is positively related to social capital formation. Homeowners have an incentive to engage in the local community in order to preserve or enhance the value of their housing asset. Moreover, homeownership creates barriers to geographic mobility, which increases the present value of the expected stream of benefits from local community social capital. We test the homeownership hypothesis alongside other individual, household and locational determinants of social capital using unique data created by merging the 2006 and 2008 samples of the New Zealand Quality of Life survey. The measures of social capital used in our analysis include trust in others, participation in social networks, attitude towards local governance and sense of community. Since homeownership is not randomly assigned, we complement our regression models with propensity score matching to control for selection effects. The results confirm that homeownership exerts considerable positive impact in the formation of social capital in New Zealand communities. In raising accountability of local government it does, however, lead to reduced satisfaction by homeowners in the performance of local councils.
Does Selling State Silver Generate Private Gold? Determinants and Impacts of State House Sales and Acquisitions in New Zealand
Authors:   Motu Economic and Public Policy Research, Bergstrom Katy , Grimes Arthur , Stillman Steve
Published: April 2018

New Zealand experienced two natural experiments with respect to state-provided social housing after 1990. First, while continuing to acquire new state houses, the National Government substantially reduced the overall state house stock by selling a greater number of houses either to existing tenants (through the Home Buy scheme) or, if the house was vacant, to other purchasers (vacant sales). From 1999, the Labour-led government ended homebuys, greatly reduced vacant sales and increased acquisitions, resulting in a major increase in the state house stock. We examine determinants of the spatial distribution of homebuys, vacant sales and acquisitions over the period 19912006, focusing on levels of, and changes in, local deprivation status and house prices as determinants. Having modelled the determinants of each category, we test whether homebuys, vacant sales, and acquisitions in an area over one five-year period had an effect on changes in local deprivation and house prices in the succeeding five-year period, after controlling for initial levels of, and prior changes in, deprivation and house prices. We find that state house acquisitions in an area led to a subsequent rise in local deprivation, consistent with the policy aim of providing housing to those most in need. While vacant sales had no material effects, a greater number of homebuys in an area led to increased local real house price appreciation over the subsequent five year period. This finding, based on the results of a politically-driven natural experiment, is consistent with the hypothesis that a scheme that transforms existing tenants into homeowners (at the same location) improves community outcomes for the surrounding neighbourhood.
Financial Contracts and the Management of Carbon Emissions in Small Scale Plantation Forests
Authors:   Motu Economic and Public Policy Research, Coleman Andrew
Published: April 2018

Under the New Zealand Emissions Trading Scheme, foresters can obtain carbon units as their forests sequester carbon. If they sell these units as they are earned, the units must be repurchased when the forest is harvested, exposing foresters to price risk. This paper examines the way forward markets, futures markets, and carbon lending markets could be used to manage this risk. It argues that carbon lending markets are likely to be the most convenient form for foresters, as they allow the total returns from forestry investments to be increased with minimal risk. The carbon units can be lent to industrial firms or developers of new forests to minimise the carbon risk they face if they make carbon reducing investments.
Immigration and Innovation.
Authors:   Motu Economic and Public Policy Research, Fabling Richard. , Stillman Steven , Maré David. C.
Published: April 2018

We combine firm-level innovation data with area-level Census data to examine the relationship between local workforce characteristics, especially the presence of immigrants and local skills, and the likelihood of innovation by firms. We examine a range of innovation outcomes, and test the relationship for selected subgroups of firms. We find a positive relationship between local workforce characteristics and average innovation outcomes in labour market areas, but this is accounted for by variation in firm characteristics such as firm size, industry, and research and development expenditure. Controlling for these influences, we find no systematic evidence of an independent link between local workforce characteristics and innovation.
Patterns of population location in Auckland
Authors:   Motu Economic and Public Policy Research, Maré David C. , Coleman Andrew , Pinkerton Ruth
Published: April 2018

This paper uses spatial statistical techniques to examine the economic determinants of residential location patterns in Auckland in 2006. The primary empirical focus of this paper is descriptive. We seek to establish the extent to which there are identifiable population subgroups that cluster together within the Auckland Urban Area, and further, to ascertain where these groups mainly live. It confirms previous findings of strong ethnic clustering and identifies clustering by qualification, income, and country of birth. It examines the interaction between incomes, land prices, and population density, and the relationship of land price with access to selected locational amenities.
Estimating the determinants of population location in Auckland
Authors:   Motu Economic and Public Policy Research, Maré David C. , Coleman Andrew
Published: April 2018

This paper analyses the location choices of new entrants to Auckland between 1996 and 2006, to identify a systematic relationship between residential location choices and features of local areas such as population density, the population composition of the area or its neighbourhood, accessibility to different types of amenities, paying particular attention to the influence of land prices. For the analysis, the Auckland Urban Area is divided into around 9,000 small areas (meshblocks). Location choices are analysed using count data methods applied to microdata from the Census of Population and Dwellings. The results emphasise the importance of own-group attraction. Groups of entrants classified by qualification, income, ethnicity, or country of birth are all attracted to meshblocks or neighbourhoods where their group already has a strong presence. The evidence demonstrates that this sorting reflects attraction to fellow group members, rather than being due to group members having common preferences for local amenities.
Patterns of business location in Auckland
Authors:   Motu Economic and Public Policy Research, Maré David C. , Coleman Andrew
Published: April 2018

We investigate the spatial determinants of industrial location and productivity variation within the Auckland Urban Area. For over 300 local areas, we consider the influence on location choice and productivity of proximity to selected infrastructure, local services, and consumption amenities, and of the density and industry composition of local employment. Using data from a microdata panel of firms, we use count data methods to model the location choices of new firms, and production function estimation for productivity estimation. We identify distinct location patterns across industries but, overall, the accessibility and employment composition measures that we examine do not account for industrial location and productivity patterns within Auckland. This increases the challenges of anticipating and planning for future business location patterns.
Preliminary Evidence on Responses to the New Zealand Forestry Emissions Trading Scheme
Authors:   Motu Economic and Public Policy Research, Karpas Eric , Kerr Suzi
Published: April 2018

New Zealand is the first country to implement a Greenhouse Gas Emissions Trading Scheme (ETS) that includes a forestry component as part of its contribution to global climate mitigation and as a strategy for compliance with the international climate change agreement the Kyoto Protocol. The goal of this paper is to provide information o forestrys role in the New Zealand ETS such that a foreign policymaker will be able to understand the intricacies and issues of the New Zealand system and be able to apply this knowledge to the design of his or her own ETS. This paper also aims to provide useful documentation of the system as it stands in 2010 for the New Zealand Parliament to use in future reviews of the system. The paper first provides a brief outline of the role of forestry in New Zealands ETS, including the reasons for its inclusion in the greater system and the rules by which forestry operates within the system. This paper then analyses these rules, indicating the reasons behind the inclusion of certain provisions where the reasoning may not be immediately clear. Finally, this paper provides both quantitative and qualitative data on how well the system is working so far, whether the system is operating as predicted, and why any discrepancies between predicted and actual outcomes arise.
Productivity and Local Workforce Composition
Authors:   Motu Economic and Public Policy Research, Maré David C. , Fabling Richard
Published: April 2018

This chapter examines the link between firm productivity and the population composition of the areas in which firms operate. We combine annual firm-level microdata on production, covering a large proportion of the New Zealand economy, with area-level workforce characteristics obtained from population censuses. Overall, the results support the existence of agglomeration effects that operate through labour markets. We find evidence of productive spillovers from operating in areas with high-skilled workers, and with high population density. A high-skilled local workforce benefits firms in high-skilled and high-research and development industries, and small firms. The benefits of local population density are strongest for firms in dense areas, and for small and new firms. Firms providing local services are more productive in areas with high shares of migrants and new entrants, consistent with local demand factors.
Homeownership, Social Capital and Parental Voice in Schooling
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Stillman Steven , Young Chris
Published: April 2018

We investigate the effects of homeownership on parents? involvement in local school elections. We use 2007 New Zealand school board of trustees data to examine whether schools where parents have high rates of homeownership experience high parental voting turnout in elections. We also investigate whether homeownership influences the probability that a school board proceeds to election, indicating parental willingness to serve as a school trustee. Similarly, we examine whether state-owned social housing rates affect these outcomes. We compile results initially without controlling for other factors, and then controlling for a wide range of other characteristics, to test the robustness of simple observed associations between homeownership and state-ownership rates and outcome variables. Our findings show no discernible effect of homeownership on parental voting turnout in school elections after controls are added (contrary to the simple positive association), but a (robust) positive impact of both homeownership and state-ownership rates on the probability that a school holds an election.
Building Bridges: Treating a New Transport Link as a Real Option
Authors:   Motu Economic and Public Policy Research, Grimes Arthur
Published: April 2018

A transportation investment that materially improves links between centres opens up previously unavailable options for new activities. Traditional cost-benefit analysis does not adequately take account of the value of this option; real options theory must be added to the analysis to evaluate the full benefits. This paper uses a specific example, Aucklands Harbour Bridge, to motivate the importance of real options analysis. Using illustrative, multi-period models of the real options problem, it highlights how inclusion of real options factors may either increase or decrease the attractiveness of a proposed investment. The models identify situations in which it is optimal to invest even where a standard benefit-cost ratio is less than one.
Rural Land Use and Land Tenure in New Zealand
Authors:   Motu Economic and Public Policy Research, Tímár Levente
Published: April 2018

Private land-use decisions are critical for a broad spectrum of environmental and social outcomes, ranging from water quality and climate change to rural income distribution. I use a large dataset of the land-use decisions of New Zealand landowners to estimate a cross-sectional multinomial logit model of land use. In this model, the optimal land-use choice depends on geophysical attributes of the land, the cost of access to markets, and on land tenure (M?ori freehold title versus general freehold title). I employ the estimated relationship in a counterfactual scenario to assess the overall impact of M?ori tenure on the willingness of landowners to supply land for the four most important rural uses in the country: dairying; sheep or beef farming; plantation forestry; and an economically unproductive use, scrub. This allows me to conjecture about the environmental implications of New Zealands land-tenure system.
Does Complex Hydrology Require Complex Water Quality Policy? NManager Simulations for Lake Rotorua
Authors:   Motu Economic and Public Policy Research, Anastasiadis Simon , Nauleau Marie-Laure , Kerr Suzi , Cox Tim , Rutherford Kit
Published: April 2018

This paper examines six different approaches to nutrient management, and simulates the economic costs and environmental impacts associated with them using NManager, a partial equilibrium simulation model developed by Motu and NIWA, the National Institute for Water and Atmospheric Research. We focus on Lake Rotorua in the Bay of Plenty in New Zealand, where the regional council is concerned with the decline in the lake's water quality and has set a goal to restore the lake to its condition during the 1960s. Reaching this goal will require significant reductions in the amount of nutrients discharged into the lake, especially from non-point sources such as farm land. Managing water quality is made difficult by the presence of groundwater lags in the catchment: nutrients that leach from the soil arrive at the lake over multiple years. The mitigation schemes we consider are land retirement, requiring best practice, explicit nitrogen limits on landowners, a simple nutrient trading scheme, and two more complex trading schemes that account for groundwater lags. We demonstrate that best practice alone is not sufficient to meet the environmental target for Lake Rotorua. Under an export trading scheme, the distribution of mitigation across the catchment is more cost effective than its distribution under explicit limits on landowners or land retirement. However, the more complex trading schemes do not result in sufficient, or sufficiently certain, gains in cost effectiveness over the simple trading scheme to justify the increase in complexity involved in their implementation.