This report compares the costs benefit analysis approaches that were applied in the case of four water and wastewater projects in Latin America and the Caribbean. The projects differed in scope: some funded new construction (Trinidad and Tobago, Paraguay), one was a rehabilitation project (Guyana), and one funded expansion and improvements to an existing system (Uruguay).
For each project, a previous economic analysis compared project investments (costs) and benefits. In each case, project benefits were estimated by using information on “willingness to pay “by project beneficiaries. Using a cost-benefit analysis (CBA) framework, project benefits were compared to project costs to estimate net benefits and/or the internal rate of return for the project. The four projects all applied some version of the contingent valuation method (CVM) to estimate project benefits, which uses surveys of consumers/water users to determine their willingness to pay for a specified environmental good or service.
The report considers both what has been done and what more might be done to expand the economic analysis of environmental impacts in project analysis. As a basis, it applies the approach outlined in the IDB Technical Note Economic Cost-Benefit Analysis (CBA) of Project Environmental Impacts and Mitigation Measures. The report discusses, from a methodological perspective, the relative strengths and weaknesses of using project-specific studies (such as surveys about willingness to pay in local communities) or “Benefit Transfer” approaches (where valuations from other studies and places are used as defacto values for a new place) as the basis for a contingent valuation assessment.
The report notes that indirect impacts of the projects on the broader environment (both benefits and costs) were only explicitly considered in one analysis (Uruguay). Similarly, the health impacts were usually not considered. It provides recommendations on how these parameters might be integrated into a more comprehensive cost benefit analysis.
This analysis explores the distributive impacts of improvements in within-city mobility, specifically of various alternative infrastructure investments and mobility policies. Four policy scenarios look at infrastructure investments in the expansion of metro, train, and bus corridors, based on current investment plans. A further five scenarios focus instead on demand management policies that impose out-of-the-pocket payments mainly to private vehicle users. A further scenario combines the two, by including investments in infrastructure and an increase in fuel prices.
The analysis estimates the impacts these changes would have on economic growth, income distribution of households and internal distribution of economic activity.
The methodology for each scenario involved applying a transportation model to calculate the expected changes on travel time and mode demand. These results are then used as inputs to a wage equation, to calculate productivity shocks. The results of this simulation feed a general equilibrium model, which computes the effects of productivity shocks on sectoral output, income and employment in different parts of the metropolitan region.
The analysis shows how different types of policies and investments generate different kinds and distribution of costs and benefits. Among its findings is the insight that, for the São Paulo metropolitan region, investments in transportation contribute to equalizing wages across space as barriers to mobility decline, favouring concentration of economic activity. It also finds that, in the case of policies that increase the individual cost of private vehicle users, the overall impact on economic growth is negative, while their distributional impacts are relatively stronger in favour of income equity and spatial cohesion.
In the context of electricity sector privatization, this paper explores the distributional impacts of possible electricity price rises, which may be necessary to enable the utility to generate the finance needed to expand electricity coverage.
The analysis uses a computable general equilibrium (CGE) model to assess the impact of relative price changes on different markets and socioeconomic groups. The paper suggests that this kind of distributional impact assessment is important because utility reforms typically affect other economic markets (for labor, investment and savings, for example) that can have a significant effect on poverty and on the welfare of the poor.
A basic distributive analysis is undertaken by comparing electricity supply before and after the country‘s first privatization attempt. It then uses a general equilibrium model to account for interactions between electricity and the rest of the economy. It describes the macroeconomic and sectoral results of the CGE model, followed by a detailed analysis of poverty and income-distribution outcomes.
The analysis finds that poor and rural households are unlikely to be the main beneficiaries of the expanded electricity network. The results indicate that direct price effects are weaker than general equilibrium effects on poverty and inequality. The analysis finds that the compensatory policies tested can be effective in helping to attenuate some of the adverse effects.
In 2008, price reforms in Turkey’s energy market resulted in a 50% higher residential tariff. These reforms were intended to encourage energy efficiency and private investment in the energy sector, but also created public debate about the potential impacts on household welfare.
This paper evaluates the distributional consequences of the tariff reform, using a short-run residential electricity demand function. The model allows heterogeneity in household price sensitivities and is estimated using a national sample of 18,671 Turkish households. The model also addresses the common problem of missing data in survey research.
The study reveals a highly skewed distribution of price elasticities in the population, with rich households three times more responsive in adjusting consumption to price changes than the poor. This is most likely because the poor are close to their minimum electricity consumption levels and have fewer coping options. In addition, the welfare loss of the poorest quintile -- measured by the consumer surplus change as a percentage of income -- is 2.9 times of that of the wealthiest.
This paper summarizes a cost-benefit framework developed specifically to explore coal plant repurposing options. It argues that retiring and repurposing coal plants may encounter resistance for reasons of costs, community impacts, and other system flexibility considerations. Evaluation of repurposing options can be supported with clear empirical estimation of its likely costs and benefits.
This paper explores the question of what proportion of capital expenditure (CAPEX) of repurposing option (s) are covered by the benefits of repurposing. A methodological cost-benefit framework was developed through a component-by-component analysis of the present value of underlying costs and benefits of repurposing coal plants, using a representative Indian coal plant (of 1000 MW capacity) as a case study. The Framework is targeted to evaluating three applications specifically: solar energy, battery energy storage and re-purposing of the turbines as a synchronous condenser. A sensitivity analysis was conducted to determine how some crucial factors influence the costs and benefits.
The study finds there is a strong economic rationale for repurposing. The present value of repurposing benefits outweigh corresponding decommissioning costs, and net benefits of repurposing cover 10%-32% of capital expenditure of the repurposing options even after excluding social benefits.
Finally, it describes a methodology for selecting plants for repurposing; based on age, energy charges and qualitative factors. Various quantitative (e.g., age, energy charge, etc.) and qualitative factors (e.g., location, RE potential, land, etc.) are posited as relevant to the assessment when identifying coal plants suitable for decommissioning and repurposing.
This report compares the costs benefit analysis approaches that were applied in the case of four water and wastewater projects in Latin America and the Caribbean. The projects differed in scope: some funded new construction (Trinidad and Tobago, Paraguay), one was a rehabilitation project (Guyana), and one funded expansion and improvements to an existing system (Uruguay).
For each project, a previous economic analysis compared project investments (costs) and benefits. In each case, project benefits were estimated by using information on “willingness to pay “by project beneficiaries. Using a cost-benefit analysis (CBA) framework, project benefits were compared to project costs to estimate net benefits and/or the internal rate of return for the project. The four projects all applied some version of the contingent valuation method (CVM) to estimate project benefits, which uses surveys of consumers/water users to determine their willingness to pay for a specified environmental good or service.
The report considers both what has been done and what more might be done to expand the economic analysis of environmental impacts in project analysis. As a basis, it applies the approach outlined in the IDB Technical Note Economic Cost-Benefit Analysis (CBA) of Project Environmental Impacts and Mitigation Measures. The report discusses, from a methodological perspective, the relative strengths and weaknesses of using project-specific studies (such as surveys about willingness to pay in local communities) or “Benefit Transfer” approaches (where valuations from other studies and places are used as defacto values for a new place) as the basis for a contingent valuation assessment.
The report notes that indirect impacts of the projects on the broader environment (both benefits and costs) were only explicitly considered in one analysis (Uruguay). Similarly, the health impacts were usually not considered. It provides recommendations on how these parameters might be integrated into a more comprehensive cost benefit analysis.
This paper summarizes a multi-criteria analysis of clean energy investment opportunities in Bangladesh, with a specific focus on integrating the potential for land-use conflicts in its assessment framework. It demonstrates the use of geospatial models to support decision-making in data-limited contexts.
Bangladesh is experiencing rapidly increasing energy demand, so installing new energy supply capacity is a key priority. Land conflicts are a particularly important consideration given the high demand for land for agriculture, human settlements, and ecological preservation. Further, the study notes that most Bangladesh ‘project opportunity areas’ are in primarily cropland area, so local scale research can help to identify non-cropland zones within these areas for possible renewable energy development. There is value then in being able to assess the merits of different approaches to expanding capacity from the perspective of their potential to minimize land use conflicts.
A geospatial tool, Multicriteria Analysis for Planning Renewable Energy (MapRE), was used to analyze the cost of various renewable energy generation technologies. It used a combination of global and country-specific datasets to include various parameters in its assessment criteria, categorized into physical (elevation and slope), socio-economic (population density, built-areas, roadways and railways), technical (resource quality, utility infrastructure), and environmental (land-use and land-cover, protected areas) parameters. These criteria are used to calculate annual electricity generation and levelized cost of electricity (LCOE) values for each project opportunity area (i.e. average cost of electricity for every unit generated over the lifetime of a project at the point) and then the potential for land-use conflicts.
The findings highlight that utility-scale solar potential is higher than previously estimated, and also that it can be developed at lower costs than coal power and could be developed in a way that required minimal cropland tradeoffs. The study also flags significant potential for decentralized roof-top solar in commercial and residential areas, which would again reduce land use conflicts. Even considering a scenario where large areas of land are reserved specifically for agriculture and human settlements, the study finds there is more renewable energy capacity than needed to support Bangladeshi growth.
This paper describes a study into Korea’s electricity sector. It uses a multi-criteria decision-making (MCDM) model that is linked to an energy-system model, in order to assess the sustainability of different policy scenarios for the sector.
The background section of the paper reviews the use of MCDM approaches, particularly in relation to the energy sector.
The analysis then considers seven different scenarios for technology mix in the energy sector, derived from government policies (three cases) and hypothetical policies (four cases). The technologies evaluated are coal, nuclear, liquefied natural gas (LNG), solar, and wind power.
The energy system model is a multi-objective goal-programming model that minimizes the total cost and greenhouse gas (GHG) emissions from electricity generation. These two objectives are defined by the authors’ view that total costs and emissions are the two primary determinants of Korean energy policy.
The MCDM model used for this study assesses the generation share of each scenario derived from the energy system model based on seven sustainability criteria covering technical, economic, environmental, and social aspects: availability, safety, investment costs, variable costs, emissions, land use, and social acceptance. The selection of these criteria and weight on each criterion are based on previous literature with the survey of experts in Korea.
The study finds that scenarios which reduce coal have a high MCDM score, due to their high score from emissions and safety parameters. Scenarios that reduce nuclear had merit in social acceptability and investment cost. The most ambitious scenarios (nuclear phase out by 2030 and coal phase out by 2050, or coal phase out by 2030 and no nuclear, replacing the gap with LNG and renewables) recorded the highest scores in terms of social acceptability.