Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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3.1.3.7 Other project evaluation approachesPorts and other nodal infrastructures are often a part of broader strategies aiming to raise the modal shareof non-road modes, namely short sea shipping, inland waterways and railways. In these cases, the analysisshould be broadened in order to also include the impacts in terms of modal changes. Careful checksshould be made to avoid double-counting.3.2 EnvironmentThis section deals with projects aimed at the preservation and protection of the environment. Specifically,waste management plants and integrated water supply services for civil use were analysed along withnatural risk prevention projects. The European Union considers natural disasters a serious challenge formany countries in which such events have recently produced severe environmental and economicdamages.3.2.1 Waste treatmentThe focus in this paragraph is both new plants and investment in the renovation and modernisation ofwaste management plants. Projects may refer to solid waste collection and solid waste sorting plants,incinerators (with or without energy recovery), landfill or other waste disposal and waste removal plants.The solid waste involved is:- waste listed in the EU directives;- waste encoded in the European Catalogue of Waste (Commission Decision 2000/532/EC 14 – see boxbelow);- other national types of waste.MAIN TYPOLOGIES OF WASTE IN THE EUROPEAN CATALOGUE OF WASTE(Commission Decision of 3 May 2000 15 )(01) Wastes resulting from exploration, mining, quarrying, physical and chemical treatment of minerals(02) Wastes from agriculture, horticulture, aquaculture, forestry, hunting and fishing, food preparation and processing(03) Wastes from wood processing and the production of panels and furniture, pulp, paper and cardboard(04) Wastes from the leather, fur and textile industries(05) Wastes from petroleum refining, natural gas purification and pyrolytic treatment of coal(06) Wastes from inorganic chemical processes(07) Wastes from organic chemical processes(08) Wastes from the manufacture, formulation, supply and use (MFSU) of coatings (paints, varnishes and vitreous enamels), adhesives,sealants and printing inks(09) Wastes from the photographic industry(10) Wastes from thermal processes(11) Wastes from chemical surface treatment and coating of metals and other materials; non-ferrous hydro-metallurgy(12) Wastes from shaping and physical and mechanical surface treatment of metals and plastics(13) Oil wastes and wastes of liquid fuels (except edible oils, 05 and 12)(14) Waste organic solvents, refrigerants and propellants (except 07 and 08)(15) Waste packaging; absorbents, wiping cloths, filter materials and protective clothing not otherwise specified(16) Wastes not otherwise specified in the list(17) Construction and demolition wastes (including excavated soil from contaminated sites)(18) Wastes from human or animal health care and/or related research (except kitchen and restaurant wastes not arising from immediate healthcare)(19) Wastes from waste management facilities, off-site waste water treatment plants and the preparation of water intended for humanconsumption and water for industrial use(20) Municipal wastes (household waste and similar commercial, industrial and institutional wastes) including separately collected fractions.14As amended by: Commission Decision 2001/118/EC, Commission Decision 2001/119/EC and Council Decision 2001/573/EC. Annex IIA of the Directive 2006/12/EC of the European Parliament and of the Council of 5 April 2006 on waste gives a list of disposal operations suchas they occur in practice. See Annex I of the aforementioned Directive 2006/12/EC of the European Parliament and of the Council of 5 April2006 on waste. The Article 1 of this Directive gives the following definition: ‘(a) ‘waste’ shall mean any substance or object in the categories setout in Annex I which the holder discards or intends or is required to discard;’. As amended by: Commission Decision 2001/118/EC, CommissionDecision 2001/119/EC and Council Decision 2001/573/EC. Commission Decision of 3 May 2000 replacing Decision 94/3/EC establishing alist of waste product pursuant to Article 1(a) of Council Directive 75/442/EEC on waste and Council Decision 94/904/EC establishing a list ofhazardous waste pursuant to Article 1(4) of Council Directive 91/689/EEC on hazardous waste.15Commission Decision of 3 may 2000 replacing Decision 94/3/EC establishing a list of wastes pursuant to Article 1(a) of Council Directive75/442/EEC on waste and Council Decision 94/904/EC establishing a list of hazardous waste pursuant to Article 1(4) of Council Directive91/689/EEC on hazardous waste.84
3.2.1.1 Project objectivesThe general objectives are usually related to local and regional development and environmentalmanagement. Specific objectives involve:- the development of a modern local and regional waste management sector;- the reduction of health risks linked to an uncontrolled management of municipal and industrial waste;- the curbing of raw material consumption and the planning of the final phases of material productionand consumption cycles;- the reduction of polluting emissions such as water and air pollutants;- innovation in technologies for waste collection and treatment.To highlight the general and specific objectives, the project should define carefully the followingcharacteristics:- the population covered by the projects, tons of waste collected and treated by type of waste (hazardouswaste, municipal waste, packaging waste);- type of technologies implemented (methods of treatment);- economic impacts on the local economy (in terms of revenues and employment 16 );- risk reduction due to the implementation of the waste management strategy;- savings in raw material consumption (such as, for example, metal and metal compounds, reclaimedand/or regenerated solvent, glass, plastics, fuel and other products of recovery operations 17 );- reduction in air, water and soil pollutants and types of environmental damage to soil and groundwateravoided.3.2.1.2 Project identificationTypology of the investmentThe main types of waste management facilities are 18 :- investments in facilities for the collection, temporary storage and recycling of waste (whether collectedseparately or not), such as municipal collection centres;- compost production facilities;- investment in facilities for physical and chemical treatments, such as oil waste treatment facilities;- household and industrial waste incineration plants and incinerators (with or without combined heatand power);- landfill sites.A map of the plant proposed will be attached to the project for a better comprehension of the localeconomic and environmental impacts. Some information on the area covered by the waste collection willalso be included. In addition, data are needed on the origin of waste: local, regional, national or country oforigin (for waste imported from another European or non-European country).16While, obviously, this is not a primary objective of the project.17Annex II B of the Directive 2006/12/EC of the European Parliament and of the Council of 5 April 2006 on waste lists the recoveryoperations as they occur in practice.18See also the aforementioned Annex II A of the Directive 2006/12/EC.85
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ACRONYMS AND ABBREVIATIONSBAUB/CCBA
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TABLESTable 2.1 Financial analysis
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FIGURESFigure 1.1 Project cost spre
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Cohesion Fund, and through the leve
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or the plant will not reveal excess
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CHAPTER ONEPROJECT APPRAISAL IN THE
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Some specifications for financial t
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FOCUS: INFORMATION REQUIREDGeneral
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In particular, CBA results should p
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CHAPTER TWOAN AGENDA FOR THE PROJEC
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objectives, are, as far as possible
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considered the appropriate shadow p
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2.3.2 Feasibility analysisFeasibili
Page 34 and 35: This approach will be presented in
Page 36 and 37: Current assets include:- receivable
Page 38 and 39: The following items are usually not
Page 40 and 41: Mainly, the examiner uses the FRR(C
Page 42 and 43: The dynamics of the incoming flows
Page 44 and 45: eturn on their own capital (Kp). Th
Page 46 and 47: While the approach presented in thi
Page 48 and 49: 2.5.1 Conversion of market to accou
Page 50 and 51: Table 2.9 Electricity price dispers
Page 52 and 53: 2.5.1.2 Fiscal correctionsSome item
Page 54 and 55: previously estimated in projects wi
Page 56 and 57: FOCUS: ENPV VS. FNPVThe difference
Page 58 and 59: 2.6 Risk assessmentProject appraisa
Page 60 and 61: Table 2.14 Impact analysis of criti
Page 62 and 63: Figure 2.6 Probability distribution
Page 64 and 65: eneficiary. The project proposer sh
Page 66 and 67: There are many ways to design an MC
Page 68 and 69: PROJECT APPRAISAL CHECK-LISTCONTEXT
Page 70 and 71: - reduction of congestion by elimin
Page 72 and 73: - the methods applied to estimate e
Page 74 and 75: - the marginal external costs: cong
Page 76 and 77: - the benefits for the existing tra
Page 78 and 79: The following tables show some refe
Page 80 and 81: 3.1.1.6 Risk assessmentDue to their
Page 82 and 83: As shown in Figure 3.1, only under
Page 87 and 88: - Waste Management Hierarchy rules
Page 89 and 90: The time horizon for a project anal
Page 91 and 92: 3.2.1.7 Other project evaluation ap
Page 93 and 94: every user support the total costs
Page 95 and 96: Territorial reference frameworkIf t
Page 97 and 98: Cycle and phases of the projectGrea
Page 99 and 100: One of the most important aims of t
Page 101 and 102: projects, as in other sectors in wh
Page 103 and 104: 3.2.3.2 Project identificationBasic
Page 105 and 106: 3.2.3.7 Other project evaluation ap
Page 107 and 108: In order to evaluate the overall im
Page 109 and 110: for regassification plants, number
Page 111 and 112: Examples of objectives are:- change
Page 113 and 114: decontamination if any;- the techni
Page 115 and 116: 3.3.3.6 Risk AnalysisCritical facto
Page 117 and 118: 3.3.4.6 Risk assessmentCritical fac
Page 119 and 120: 3.4.1.5 Economic analysisThe follow
Page 121 and 122: Financial inflows• Admission fees
Page 123 and 124: expectancy suitably adjusted by the
Page 125 and 126: The time horizon for project analys
Page 127 and 128: A Cost-Benefit Analysis should cons
Page 129 and 130: CHAPTER FOURCASE STUDIESOverviewThi
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c) Road users producer’s surplus:
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4.1.5 Scenario analysisTwo scenario
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The financial performance indicator
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Table 4.10 Economic analysis (Milli
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Table 4.12 Financial return on capi
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4.2 Case Study: investment in a rai
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4.2.4 Economic analysisThe benefits
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Financial investment costs have bee
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Figure 4.6 Results of the risk anal
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Table 4.22 Economic analysis (Milli
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4.3 Case Study: investment in an in
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ate of 0.6% per year is assumed for
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The shadow price of the CO 2 avoide
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As a result, the probability distri
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16 17 18 19 20 21 22 23 24 25 26 27
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4.4 Case Study: investment in a was
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4.4.2 Financial analysisAlthough in
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THE CALCULATION OF REVENUESReferrin
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0.15 m 3 /m 2 a depreciation of 20%
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As result, the probability distribu
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Figure 4.13 Probability distributio
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Table 4.48 Financial return on nati
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Table 4.50 Financial return on priv
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4.5 Case Study: industrial investme
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4.5.4.1 Investment costsThe total i
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Finally, a residual value was estim
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This analysis shows the need to pay
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Table 4.62 Financial return on inve
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Table 4.64 Return on private equity
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Table 4.66 Economic analysis (thous
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ANNEX ADEMAND ANALYSISDemand foreca
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The method applied for the forecast
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Furthermore, travel demand depends
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This Guide supports a unique refere
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A higher discount rate for countrie
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Figure C.1 Project ranking by NPV v
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The main problems with this indicat
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EXAMPLE OF SHADOW WAGE IN DUAL MARK
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Another exhaustive way to include d
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Figure E.2 Percentage of low income
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ANNEX FEVALUATION OF HEALTH &ENVIRO
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Figure F.1 Main evaluation methodsS
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- expenditure on capital equipment
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due to air pollution or water conta
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BENEFIT TRANSFER - SELECTED REFEREN
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ANNEX GEVALUATION OF PPP PROJECTSIt
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adjustments for Competitive Neutral
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ANNEX HRISK ASSESSMENTIn ex-ante pr
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Reference ForecastingThe question o
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Figure H.5 Levels of risks in diffe
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ANNEX IDETERMINATION OF THE EU GRAN
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A.4. Technological Alternatives and
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GLOSSARYAccounting period: the inte
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Market price: the price at which a
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BIBLIOGRAPHY1. ReferencesBelli, P.,
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Ray, A. 1984, Cost-benefit analysis
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EnvironmentGeneralAtkinson, G., 200
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European Commission, DG Tren, 2003,
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Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

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