Economists at Large have undertaken a review of the report, Impact on North Stradbroke Island from ceasing sand mining (the Unimin Report), conducted by Synergies Economic Consulting (the Consultants) for Unimin Australia (now Sibelco) and released in June 2010.  Save Straddie Alliance asked Economists at Large to review the Report.  We found three main flaws in the report:

• Failure to consider planned mine closures: Closure of the Yarraman mine, planned for 2015, will reduce the volume of mineral sands mined on the island by 34%.  This reduction was included in the Unimin Report.  This omission results in the value of sand mining on the North Stradbroke Island (NSI) being overstated by as much as 37% for gross output value and 57% for government revenues.  A thorough economic impact assessment should ascertain what level of impact is likely to occur against a business as usual scenario, in this case, where mining is phased out at the end of the life of the mines.  This approach was not taken for the Unimin Report.
• Confused scope for impacts: Impacts that will be felt at a state or national level are often considered to be impacts on the NSI economy.  For example, it is correct to include the reduction in gross regional product in wider regional analysis, but it needs to be made clear this does not translate to a welfare loss of this magnitude for the NSI community.
• Modelled impacts on NSI economy are overstated: The combination of the points above results in the modelled impacts being highly overstated (section 4.4).  While we have not attempted to calculate more accurate impacts, they are likely to be much less than estimated in the Unimin Report.  Furthermore, the method of modelling used may not be appropriate for this type of analysis and more details of the results should have been presented.

In addition to the points above, Economists at Large believe that the Unimin Report is narrow in its analysis and fails to consider externalities and opportunity costs of mining and the broader economic structure of the NSI economy.  This is not a fault of the report itself, but rather a caution to decision makers and the community reviewing the findings.

Economists at Large recommend that decision makers and the local community conduct more thorough analysis of the net benefits and costs to the NSI economy as a result of sand mining.

Download the full review: ECOLARGE-NSI-SandMining-Economics-FINAL.

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