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Correction to Cost Benefit Analysis – America’s Cup

Correction to Cost Benefit Analysis – America’s Cup

Market Economics has advised the Ministry of Business, Innovation and Employment (MBIE) of errors to the cost-benefit analysis in their report “36th America’s Cup: High Level Economic Assessment Evaluation” which MBIE commissioned.

Market Economics advises the error does not affect their Economic Impact estimates for hosting the regatta in Auckland:
• From 2018-2021 provides between $0.6 - $1.0 billion in value add to New Zealand’s economy and an employment boost of between 4,700 and 8,300. The range reflects different assumptions around the number of syndicates competing, visiting super yachts, international tourists and the cost of hosting.
• Impacts positively on sectors like services, manufacturing (mainly around boat building and super yacht refits) and tourism, including food, retailing and accommodation.
Their miscalculation affects the Cost Benefit Analysis in the report as follows:
Scenario Original Revised
High 1.8 1.10
Medium 1.2 0.997*
Low 1.6 1.14
*Number has not been rounded.
In simple terms, the cost benefit ratio is normally the total benefits divided by the total costs (e.g. construction cost plus costs to deliver the goods and services).
However, Market Economics had erroneously divided net benefits (new spending less the costs to deliver the goods and services) by total construction costs.
This has now been corrected in the report and an updated version can be found here http://www.mbie.govt.nz/info-services/infrastructure-growth/americas-cup
MBIE appreciates the pragmatic approach that Market Economics took working with us once the error was identified.

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