Climate change adaptation and investment decision making

Avoid costly delays in decision-making. For deep uncertainty, plan ahead, start small, and keep monitoring. Climate is beginning to exacerbate extreme “one-in-100-year” events. Our knowledge of the likelihood of these large-impact events happening in shorter intervals is limited. Adaptive Decision-Making can help to minimise the cost (from delays) to the economy through increasing flexibility at the planning phase. Our earlier work estimated the annual cost of delay to be equal to 18 per cent of the capital cost of projects.

Cite this article

Principal Economics. (2023). Climate change adaptation and investment decision making. Waka Kotahi NZ Transport Agency.

Review of Housing and Business Development Capacity Assessments

The Ministry for the Environment (MfE) appointed Principal Economics to review the Housing and Business Development Capacity Assessments HBAs). Our review included all councils’ HBAs, except for Rotorua and Wellington, which were not available at the time of this review. The focus of our review was on the requirements of the National Policy Statement on Urban Development 2020 (NPS-UD 2020). The outcome of our review indicates the areas of improvement for the next round of HBAs both for the councils and for the MfE and HUD (the ministries).

Reviews that have been published online can be found below:

Chorus’s base capital and operating expenditure

We provided advice on the cost escalation indices relevant to Chorus’s cost categories, including network Operating Expense (OPEX), IT Capital Expense (CAPEX), network electronics, greenfield expansion, poles CAPEX, network sustain, building and services, physical network, site lease and fibre lease. The outputs were used for Chorus’s RPE1 submission. Our report was informed by the information provided by engineers and the stakeholders on the composition of cost factors. We provided advice on the available data and methodologies to provide robust projections and forecasts of the impact of COVID-19 disruption. This was particularly a challenging project because this was the first submission of Chorus and identifying the precise indices for predicting cost factors was critical.