NZIER has just released a pathbreaking study estimating the economic value of the frigate force. Placing an economic value on defence forces has been discussed in the literature but never attempted.
Co-Authors Derek Gill and Jim Rolfe commented,
“We applied three approaches to value the Naval Combat Force (NCF). These were from the perspective of Cabinet Ministers, ordinary Kiwis and security experts. We expected the different perspectives to yield very different valuations, as we found that Kiwis and experts had different preferences in the proof of concept phase”.
“Instead, we found remarkably consistent valuations, while different stakeholders valued different attributes; all placed a significant economic value on the NCF in the range of $3.5B–$10B over 30 years.”
“The research also yields insights about how there is a significant variation amongst ordinary Kiwis about how different people value the frigate force.”
Like any experimental, leading-edge research, this finding is subject to caveats and cautions which are outlined in the report. “This is leading edge, if not bleeding edge work – nothing of this kind has been attempted anywhere else in the world – although the UK has undertaken a comprehensive scoping study. “ But the report shows the power of various approaches to non-market valuation – even for something as tricky as a frigate force.