Economic Evaluation of the Horticulture Innovation Australia R&D Portfolio (2008-2014)

Economic evaluation was completed by fruit and vegetable industry across the Horticulture Innovation Australia (HIA) portfolio using benefit cost analysis techniques. The main purpose of undertaking the analyses was to demonstrate the outcomes and benefits that have emerged or are likely to emerge from R&D investments. The work was completed for the Council of Rural Research & Development Corporations (CRRDC) that aims to demonstrate the impact, effectiveness and return on investment of the Rural Research and Development Corporations. Description of research projects included objectives, outputs, activities, costs, outcomes, and benefits. Benefits were described qualitatively according to their contribution to the triple bottom line of economic, environmental and social benefits. A range of benefits were valued in each analysis. Benefit cost analysis was used to generate investment criteria. The Present Value of Benefits (PVB) and Present Value of Costs (PVC) were used to estimate investment criteria of Net Present Value (NPV) and Benefit-Cost Ratio (BCR) at a central discount rate of 5%. The Internal Rate of Return (IRR) was also estimated from the annual net cash flows. A 30 year benefit time frame was used in all analyses, with benefits estimated for 30 years from the year of last investment. Costs for the R&D projects included HIA cash contributions as well as any other resources contributed by third parties. Sensitivity analysis was undertaken for several assumptions that had the greatest degree of uncertainty or for those that were seen to be key drivers of the investment criteria. Evaluations were completed by Michael Clarke in partnership with Dr Peter Chudleigh of Agtrans Research.