Cost Benefit Analysis For Developing Countries

Using case studies, economic theory and empirical research, the author of this work analyzes developments in project appraisal using the approach recommended by the World Bank. Considerations include: investment criteria; risk analysis; the social discount rate; and the basic needs approach.

This updated new edition explores the techniques used to assess the economic impact of projects in developing countries. Blending an academic understanding of economics and development with an accessible style and practical advice, the costs and benefits of investment projects, an important mechanism for economic development, are assessed to ensure that resource allocation is as productive as possible. New material has been added, particularly on the environmental impact of projects, the role of the discount rate in decision-taking, the application of techniques to estimate willingness to pay for benefit estimation and the quantification of health impacts. Although the basic techniques of project analysis were developed many decades ago, they remain highly relevant to address current concerns, such as population growth, urbanisation, pressure on physical infrastructure, inequality, and the climate crisis. This book aims to provide an accessible overview, drawn from extensive practical experience, of project analysis in developing countries. It will be relevant to students, researchers, and practitioners interested in development economics.

The techniques and methods of project appraisal in developing countries have been considerably expanded and refined since they were first introduced in the late 1960s. This up-to-date and authoritative survey volume demonstrates the ways in which cost-benefit analysis has developed in response to changes in economic circumstances and conditions over the past three decades. An international group of academic and professional economists covers areas including problems in the practical application of cost-benefit techniques by international agencies, the treatment of income distribution, discounting, the effects method, the logical framework as a complement to project appraisal, aid tying, risk criteria in decision making, benefit valuation in the water sector, the appraisal of technical assistance projects, privatization in transition economies and shadow pricing in transition economies. Professor Kirkpatrick and Professor Weiss have prepared an insightful overview essay introducing the broad selection of work presented in this volume.

The book presents the theory of cost-benefit analysis and applies this theory to contemporary problems of development economics. It is distinctive in that it combines an introduction to welfare economics and project appraisal with a discussion of current issues in development economics such as structural adjustment policies, commodity stabilization programs and environmental issues. The book assumes a basic economic understanding and should be a useful text and also of interest to public policy administrators.

The Asian Development Bank (ADB) has been continuously undertaking measures to enhance the effectiveness of its operations. To improve projects both at the preparation and implementation stages, ADB issued the Guidelines for Economic Analysis of Projects in 1997 as a means to enhancing project quality at entry. The conduct of proper economic analysis helps ensure the efficient use of development funds and public resources and thereby increase aid effectiveness. This practical guide is a supplement to the Guidelines for the Economic Analysis of Projects. It provides an overview of recent methodological developments in cost-benefit analysis as well as suggested improvements in the economic analysis of projects in selected sectors through case studies. These case studies illustrate the application of suggested methodologies, taking into account sector-specific needs, as well as difficulties faced by practitioners in terms of data and time constraints during project processing. It also aims to contribute to ADB’s capacity building initiatives as this will be the main reference material for conduct of economic analysis.

Investment projects are an important mechanism for economic development. However, their costs and benefits must be assessed to ensure that the resources committed are being used as productively as possible. This book explains the techniques available to assess the economic impact of projects in developing countries. It draws on the authors' experience in teaching and applying these techniques and combines relevant economic theory with a clear understanding of what can be done in practice. The book aims to make existing techniques readily accessible to both students and practitioners. The second edition has been rewritten with new project examples and the addition of two new chapters in finance and the environment.