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

Strengthening Provincial/LocalPlanning and Expenditure ManagementProject Evaluationand DevelopmentExample (r ) A communal irrigation project promotes the growth of parasitesthat cause schistosomiasis. The prevention measure takes the form of frequentcleaning of the canals to get rid of snails. The cleaners need to use specialequipment for cleaning. This cost as well as the labor component needs to beincluded as part of the O&M cost.Example (s): The construction of a “solar dryer” for palay exposes theneighboring residents to respiratory hazards. This can be mitigated by installingfinely-meshed nets around the solar dryer. The cost of the nets as well as thereplacement has to be included.4.2 How much is the benefit of the project truly worth to society?We value the economic benefit of the project’s output at the price that consumersare “willing to pay” for the good. Again, we consider several cases:4.2.1 Good is nontradeable.The same rules as in valuing nontradeable inputs apply. Refer to 4.1.3 a.4.2.2 Output good is importableAs in the case of importable input, we consider the CIF price, but this time, wesubtract from it the handling and transport costs from port to project site.EP = CIF _ price * ER * FEP −(handling _ cost less taxes) − (transport _ cost less taxes)where EP is the economic priceCIF_price is the CIF price of the good at the portER is the prevailing exchange rateFEP is the foreign exchange premium determined by NEDAHandling_cost is the cost of handling at the portTransport_cost is the cost of transporting the good from the port to the projectsite4.2.3 Output good is exportableAs in the case of exportable input, we consider the FOB price, but this time, wesubtract from it the handling and transport costs from port to project site.EP = FOB _ price * ER * FEP −(handling_ cost less taxes) − (transport _ cost less taxes)where EP is the economic priceFOB_price is the FOB price of the good at the portER is the prevailing exchange rateFEP is the foreign exchange premium determined by NEDAHandling_cost is the cost of handling at the portTransport_cost is the cost of transporting the good from the port to the projectsiteRGEdillon January 200645