An analysis of the returns from past research and development in the New Zealand aquaculture industry

Abstract

This thesis analyses the returns to past research and development (R&D) in the New Zealand aquaculture industry. The methodology for analysing the returns to R&D is first established. This methodology is then further developed throughout the remainder of the thesis. Second, an overview of New Zealand aquaculture and the role that R&D has played in the industry is provided. This provides the reader with the background to the choice of the two case studies. These case studies analyse the returns to R&D in much greater detail. It also provides the necessary background to analyse developments in the case studies. Both a qualitative and a quantitative approach are taken in conducting the case studies. For the quantitative component of the case studies, cost - benefit analysis is used to measure the returns to R&D. The assumptions behind the cost - benefit analysis cannot be understood without the preceding description and background information. This background information is provided in the overview chapter and in the qualitative components of the two case studies. The first case study is a description and cost - benefit analysis of scallop R&D conducted in the southern scallop fishery. The second case study is a description and cost - benefit analysis of green - lipped mussel processing research and development. High returns to R&D investment are found in both case studies. Much higher returns are recorded if one accounts for only the costs of the successful R&D projects, out of a set of R&D projects concerned with the same problem. The returns to R&D estimated in the case studies are dependent upon the assumptions made in the analysis. Using the cash flows from 1978 to 2014 respectively, the R&D and running of the scallop enhancement programme (first case study) has a 20.6% annual internal rate of return and a $8.2 million net present value at a 10 percent discount rate. For the second case study, the magnitude of the returns to the green lipped mussel processing R&D are depends on the proportion of the half-shell pack's (a mussel product form) commercialisation that is attributed to this R&D. At a 5% proportion of the half-shell pack's commercialisation attributed to the unit's R&D, the returns from this investment, over the period from 1975 to 1994, are high enough to pay back the R&D costs at a 20% discount rate. R&D was found to have played a major role in the development of the New Zealand aquaculture industry. The thesis also makes important findings about the methodology of analysing the returns to R&D.