Modeling the Regional Economic Impacts of the 2007/08 Drought: Results and Lessons

The 2007-08 drought affected a large area of New Zealand. This paper describes the analytical framework used to estimate the associated regional and national economic impacts. Results suggest that calculating drought economic impacts by applying standard farming industry multipliers to changes in farm gate output can greatly overstate both regional and national economic impacts. Calculating impacts using differences between forecast and actual farm production and expenditure by farm type is both feasible and produces far more reliable impact estimates.