Benefit Cost Analysis of Wine Australia R&D Investments 2022-23
Abstract
To evaluate the value of Wine Australia’s R&D investments, AgEconPlus was commissioned to undertake an ex-post benefit-cost analysis of projects which were completed during the 2022-23 financial year. The six randomly selected projects were:
- CSA 1701-1.3: Rootstock genetics & improvement: new improved rootstocks with durable resistance to root-knot nematodes and phylloxera
- PFR 2001: Best practice management of grapevine viruses in Australia
- WA 2003: Rapid surveillance and assessment of fire damage in South Australian vineyards for decision making
- UA 1803-1.3: Plant sensor-based precision irrigation for improved vineyard water use efficiency, grape and wine composition and quality, and vineyard profitability
- AWR 1701-3.1.2: Using glycosides and other flavour precursors for improved wine flavour
- SAR 1701-1.1: Grapevine trunk disease management for vineyard longevity in diverse climates of Australia
Given the assumptions made for each evaluation, all six investments are expected to produce positive net benefits over 30 years from the last year of investment.
Summary
Economic analyses of six research and development (R&D) projects funded by Wine Australia has been undertaken. The main purpose was to demonstrate the outcomes and benefits that have emerged or are likely to emerge from investment. This forms part of the process for the Council of Rural Research & Development Corporations (CRRDC) that aims to demonstrate the impact, effectiveness and return on investment from the Rural Research and Development Corporations. Wine Australia is funded by statutory levies paid by industry participants, with matching funding provided by the Australian Government up to 0.5 per cent of the industry's gross value of production.
Each of the six analyses provides a description of the constituent projects including objectives, outputs, activities, costs, outcomes, and benefits. Benefits are described qualitatively according to their contribution to the triple bottom line of economic, environmental, and social benefits. While a range of potential benefits of each project are identified, the analysis focused on the most likely and most significant benefit stream. A number of potential benefits therefore remained unquantified and hence the estimated net benefits of some projects may be considered conservative. The analyses were undertaken for total benefits and Wine Australia benefits, including those expected in the future as a result of the investment.
Investment in all six projects yielded positive results at a 5% discount rate and a 30 year analysis period.