PED guidebook main sxn rev6. FINAL.pdf - LGRC DILG 10

Strengthening Provincial/LocalPlanning and Expenditure ManagementProject Evaluationand DevelopmentBy tradeable, we mean that the good is being demanded and/or suppliedin the international market. The National Statistics Office keeps track ofexternal trade statistics and this provides information on whether the goodis being imported or exported.b. If wholly tradeable, is it an exportable or importable good?If the domestic price of the good is less than the freight-on-board (FOB)price at the border, then the good must be exportable. On the otherhand, if the domestic price of the good is higher than the cost-ofinsurance-and-freight(CIF) price at the border, then the good must beimportable. Again, external trade statistics can provide the necessaryinformation.c. If partly tradeable, what proportion of the cost is due to tradeable inputs?d. For projects to be funded internally, we can skip questions a-c and simplyanswer: How much is the cost of the good at the project site? Net oftaxes?The following matrix may be useful in summarizing this information:Table 6Major ProjectInput Tradeable ? % TradeableExportable?Importable?Cost at projectsite known?How much is theunit cost?4.1.3 Computation of Economic Cost. The computation of economic cost dependson whether the good is wholly tradeable (importable or exportable), partlytradeable or non-tradeable.i. Good is non-tradeable.• The true cost is a weighted average of the demand and supply prices.d d s sP= w *P + w *P ;d sw + w = 1RGEdillon January 200641