WA IHI NORTH PROJ ECT ECONOMI C IMPACTS For New Zealand consenting purposes only. Forward looking information must not be relied on for investment purposes. 13 3.2. Our approach to estimating the economic effects We use a consistent approach to evaluate the WNP , as we have done for other consent applications and the 2016 SIMP report. We measure the economic value created by the mine for each year of the project from best estimates of production, revenue, royalties, employment, investment, and purchases from suppliers. We use the income approach of National Accounts, where gross value added is roughly the income to workers, plus the gross operating surplus of the mine and royalties paid. To quantify the impact of the WNP , we look at the additional economic gains from our current projections. For Hauraki District effects, we report purchases from local businesses to better understand the total local spending related to mining activity. 3.3. Multiplier effects We report the direct economic effects of the mine. We also supply indirect and induced effects of the mine’s activity on employment (also known as multiplier analysis) but advise caution in their interpretation. Multiplier analysis does not take into the account the potential flexibility of the economy and the isolation of some sectors and economic resources. Flexibility would mean that idle resources are quickly deployed for new opportunities. Isolation would mean that some parts of the economy will not respond to economic changes in mining, because their job, income and other economic connections are not related to the mine. For example, retired people or those currently unemployed and without the necessary skills and attributes to work in the mining sector do not experience much direct effect from the mine, although they may receive indirect economic gains from spending in the local economy, as well as additional amenities and services available in a larger population related to the presence of the mine. We estimated the multiplier effects from the 2013 Input-Output tables published by Statistics New Zealand. We have updated this analysis based on the extraction method4, where we analyse the Input-Output tables and estimate how many jobs would be affected if an industry were to shut. We estimate that if the previous metal mining industry were to close, for each mining job 3.7 jobs in other parts of the economy would be lost. We sense checked our estimates for the local effects of Waihi mining employment changes in other sectors. We observe very strong correlation between jobs across the Hauraki District and local mining jobs over the last two decades, displaying different patterns to national and neighbouring district trends – supporting our analysis that gold mining activity supports a wide 4 Erik Dietzenbacher & Michael L. Lahr (2013) “Expanding Extractions”, Economic Systems Research, 25:3, 341-360, DOI: 10.1080/09535314.2013.774266
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