Economic Evaluation of the LHI Rodent Eradication Project

The Economic Evaluation of the project has now been complete. The study undertaken by Gillespie Economics compared proceeding with the REP to continuing with the current rodent control. Key points from the report are that:

  • Continued presence of rodents could affect biodiversity and the tourism experience and therefore lead to a reduced tourism demand.
  • Proceeding with the REP has significant net economic benefits both to LHI residents, tourists and Australia. The project has a Benefit to Cost Ratio of 17:1  which means it is easily justified on economic efficiency grounds.
  • In both the short term and long term the economic activity impacts on the LHI economy from the REP are likely to be positive.
  • A potential for reduction in tourism during the REP was considered to be low but even if there was some reduction, it would be more than offset by demand for accommodation and meals from the project workforce. Potential short term impacts to tour operators can be offset by hiring tour vessels and vehicles for various aspects of the project.
  • Economic benefits of the REP are primarily driven by improved biodiversity (including preventing further species extinctions) and increased tourism demand as a result.
  • An increase in tourism demand would lead to:
    • An increase in the market price for accommodation on LHI during peak tourism periods (even though no increase in visitation is possible because of the bed cap). Accommodation provider and airlines would be the main beneficiaries during peak periods.
    • An increase in visitation and in the market price for accommodation on LHI in off peak tourism periods. All tourism providers i.e. accommodation providers, tour operators, food outlets and shops would benefit during off peak periods.

A copy of the report can be downloaded from the Reports page.