Can economic modelling help inform policy decision-making?
As part of their work, the Forestry Ministerial Advisory Group (FMAG) sought independent advice on what economic model or models would be most appropriate to test hypothetical or proposed economic policies for the forestry sector.
FMAG is comprised of experts and industry representatives appointed by the Minister of Forestry. The group is tasked with providing independent advice and recommendations on matters relating to the forestry sector, including policy development, legislative changes, and industry issues.
Using our expertise, we developed a novel approach to identify which models, if any, would be appropriate to use. We started by identifying a wide range of economic models that could be used "off the shelf" with some expertise. We worked with FMAG to develop a set of attributes that best describe a "good" economic model for the industry, taking into consideration several qualitative research methodologies. This enabled us to critically assess each of the 19 models we identified against every attribute that was identified by FMAG.
With this approach, we were able to provide FMAG with a verifiable, replicable, and independent assessment of which model best met the identified attributes. We subsequently workshopped various hypothetical policy questions to practically test which model or models would be able to answer the question.
The results showed that models based on the Global Trade Analysis Project (GTAP) database, C-Plan (New Zealand Climate Change Commission), Woodscape, and BERL's Computable Generated Equilibrium (CGE) model, JOANNA, are the most useful for common policy questions. These models also scored highest against the attributes that are important to FMAG.
This project is a case study in how BERL offers a unique perspective in economic, policy, and modelling advice. The report is available on the Ministry for Primary Industries website.