Recommended Input Assumptions
- Long-Term (40-Year) Economic Demographic and Economic Projections: follow the assumptions of Treasury's Long-Term Fiscal Position (updated every four years), see especially Chapter 4. These assumptions include projected GDP, labour productivity growth, inflation, and 10-year real government bond rate.
- Medium-Term (15-Year) Economic and Fiscal Projections: follow the assumptions of Treasury's Fiscal Strategy Model (updated annually in the Budget Economic and Fiscal Update). These assumptions include projected GDP, labour productivity growth, inflation, and 10-year real government bond rate.
- Short-Term (5-Year) Economic Projections: follow the Treasury's latest Economic & Fiscal Update. These include GDP, inflation, 10-year bond rates and US Dollar exchange rates. U.S. dollar exchange rates are not currently published on the Treasury's website, but will be published in the future. The Treasury's current projections for U.S. dollar exchange rates are currently published on the EDAC pages of MED's website. The projection for the final period provided by Treasury may be held constant in subsequent years.
- Population Projections: use Statistics New Zealand National Population Projections: 2006 (base) – 2061, mid-range projection (Series 5).
- Commercial Financing Rate: 8% post tax real.
- Discount rate: for government costs and benefits use 5% real, with sensitivities at 2.5% and 10%. Authors may wish to acknowledge that the Treasury's Cost-Benefit Analysis Primer [326 kB PDF], v.1.12, December 2005, specifies a default assumption of 10%; see Table 2.1a.
- Oil Prices: follow the most current NYMEX futures prices to 2016 (or the last year available) at the NYMEX website. Since future oil prices are highly uncertain, modellers are encouraged to consider more than one oil price scenario, including a scenario with rising oil prices. Longer-term projections will be addressed by EDAC as the need for them arises.
- Imported Gas Prices: follow oil prices according to the Japanese Crude Cocktail Formula discussed in New Zealand's Energy Outlook to 2030, September 2006, Section 7.2.
- New Gas Discoveries: assume to average 60 PJ/year with production from new discoveries starting in 2012. This number represents the historical average excluding the Maui field. Where this is a critical assumption, it is appropriate to consider alternative assumptions as well.
- Coal Prices: assume NZ$3.50/GJ in 2010, rising to NZ$4/GJ by 2015 at the import terminal. An additional NZ$0.40/GJ may be added for inland transportation to the Huntly power station. These prices do not include the cost of emissions units. These assumptions are consistent with New Zealand's Energy Outlook to 2030, September 2006, Section 3.1.
- Greenhouse Gas Emissions Factors for Fuels: follow Chapter 4 of New Zealand Energy Greenhouse Gas Emissions 1990-2006, June 2006.
- Greenhouse Gas Emission Factors for Electricity: follow Ted Jamieson's paper Carbon abatement effects of electricity demand reductions, November 2007, on the EDAC pages of MED's website. The marginal emission factors presented in that paper are generally preferred for policy analysis work to simple average emission factors. Higher marginal emissions factors than those in the paper are appropriate for analysis of measures impacting primarily on peak demand, such as home heating and insulation. If required, average emission factors are available in New Zealand Energy Greenhouse Gas Emissions 1990-2006, June 2006, Table 4.8.
- Current Light Vehicle Fleet Statistics: follow Ministry of Transport, The New Zealand Light Vehicle Fleet; Light Fleet Statistics 2006 [795 kB PDF], September 2007. These include fleet size and composition, vehicle kilometres travelled, and fuel economy.
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