[rts] Economic Evaluation or Appraisal

[jdhowe]

Dear All,

This message was stimulated by the messages from Neranjana and Joaquin.
First some clarity on terminology might help. If you are going to assess
a bus project that has already been undertaken then that is an
evaluation i.e. post investment. The correct criteria to use are those
which were used to justify the project in the first place, or the
objectives. These may have been economic, financial, purely social, or a
mixture of all of them. Commonly they were not very specific in which
case its rather unfair to attempt a retrospective justifcation that was
not part of the original decision. 

Unfortunately the literature is full of references to evaluation when
what is meant is an appraisal or pre-investment justification. The
reality is that there are still not any well recognised methods for
appraising investments in which vehicles or vehicle services are to be
provided with or without infrastructure investment. In September 1999 I
was asked to address World Bank transport sector staff on just this
issue. i.e. they are struggling with this one too. The Bank has coined
the term 'rural transport projects' to describe such proposed
investments. To the best of my knowledge they have only been undertaken
in the past as pilot projects in which case no explicit economic
justification was undertaken: they were simply assimilated as part of
the non-justified components of large infrastructure loans. Training and
a few other components are normally treated this way as well as long as
they do not account for more than 20-25% of the total. Dieter can I am
sure tell you the correct figure. The only specific example I am aware
of was in Ghana (1986) where vehicle and infrastructure investment was
treated as a package and justified on the basis of an increased marketed
surplus assumed to result from the investment.

There are other more complex considerations in relation to these types
of projects which I discussed in a Working Paper prepared for the Bank
discussions. Its in the form of an annotated Powerpoint presentation. I
am happy to send a copy to anyone who is interested.

regards,

John Howe.

PS Neranjana if you can tell me more about what you are trying to do I
am happy to send more focused ideas.
-- 
jdhowe    http://www.ihe.nl    Phone: +31 (0)15 2151740  
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