DRAFT MARCH 2014 Predator-Free Stewart Island/ Rakiura ‘An Economic Appraisal By Gareth Morgan & Geoff Simmons Morgan Foundation January 2014 THE MORGAN FOUNDATIONContents Predator-Free Stewart Island/ Rakiura Summary, Introduction & Method, Improvements in Ecosystem Services from Predator Eradication, Financial Benefits of Predator Eradication for Stewart Island/ Rakiura, Existing Tourism in New Zealand and on Stewart Island/ Rakiura, Evidence of Eradication Impact on Tourism, Estimate of Tourism Increase under Predator-Free scenario Financial Benefits of Eradication Process, Summary of Financial Benefits to Stewart Istand/ Rakiura Economy. Social Benefits of Eradication to Stewart Island/ Rakiura, Other Ecosystem Services, Provisioning Services. Regulating Services, Supporting Services, Cultural Services, National Return on investment in Predator Eradication, Appendix: Case Studies of Social Benefits and Issues, a4 4 20 2s 27 28 29 32 32 37 38 43 46Summary This report estimates the benefits of making Stewart Island/ Rakiura predator free. The proposal {sto do thisin two phases, starting withthe Halfmoon Bay area (denoted in this report as “HMB”) before progressing tothe rest ofthe island (denoted inthis report as"full’). We have tried to include, where possible, the full scope of benefits that may arise from the eradication, whether they could be valued or not. The costs have already been estimated elsewhere There are awide variety of benefits that would be generated as a result of the island being predator free. Primarily we would expect to see the forest and marine ecosystems (ecosystems are plants animals, micro-organisms and their nomliving environment that interact as a unit) regenerate and native wildlife flourish. The resulting environment would be unique in the world, which would generate many benefits. Some of those benefits are large, tangible, and possible to estimate, such as increased tourism (in Stewart Island/ Rakiura and New Zealand more broadly). Others are less tangible and more difficult to estimate, such as improving the quality of the visitor and resident experience, saving our threatened iconic and culturally significant native species and storing more carbon in a regenerated forest. In the long run, once populations of traditionally harvested species hhave recovered, reinstatement of sustainable harvesting rights to local Maori could conceivably be considered. Finally, some benefits are speculative including improvement in our international ‘reputation leading to increased immigration of skilled people and a larger premium attracted by our products overseas. In estimating benefits, the first question is alvays ‘which benefits, and to whom’? The focus in this ‘report has been on the financial benefits to the residents of Stewart Island/ Rakiura itself. From this perspective, the benefits brought by increased tourism and spending by the eradication workforce are crucial. We know that tourism to Stewart Island Rakiura has dropped by at least 25% since the global financial crisis. The existing predator free sanctuary of Ulva sland is now central to the tourism offer of Stewart Island Rakiura, and attracts a steady stream of high value visitors. For completeness we have also included an initial analysis of the return on investment to New Zealand as a whole from making Stewart Island/ Rakiura predator free. Our estimates conclude that the costs of the smaller Halfmoon Bay project could be easily justified on direct economic benefits alone, particularly as a result of increased international tourism. The business case for the full eradication stacks up too, however it relies on other, more difficult to measure, ecosystem services to justify the significantly higher cost. The two most important services are saving many of our rarest native species {including iconic species like kiwi, Kokako and kakapo), and the carbon dioxide stored in the regenerating forests. Both of these areas need further research to improve the estimates of the improved ecosystem services brought about by predator eradication,