Environmental economics and valuation: towards a practical investment framework for Catchment Management Authorities in New South Wales

The Catchment Management Authorities in New South Wales have programs that arecollectively investing $436 million over four years to achieve catchment-wide naturalresource/environmental improvements. In this paper, we consider the question of howto best allocate these resources so as to increase the well-being of the public withincatchments and the state. We consider the current approaches used by CMAs andmake a case for Benefit-Cost Analysis as an alternative means of assessing ex antequestions of priority setting at the catchment level and for project appraisal. A majorissue for BCA is the estimation of potential benefits from project investments,particularly the estimation of values that catchment communities and those livingoutside the catchments place on the non-use benefits associated with environmentalimprovements. We discuss alternative means of eliciting such values and propose thestated-preference method of Choice Modelling as a means of overcoming thisBenefit-Cost Analysis shortcoming, because it incorporates advances in non-marketvaluation.