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PART III - PROJECT ANALYSES SUMMARIES
A. Economic Analysis Summary
1. Economic and Financial Returns
The overall economic internal rate of return for
the project is estimated at 18%, ranging from a high of 19%
for cropping systems, to a low cf 17% for the other farming
systems component (see Figure III-A-I below). The IRR is
relatively insensitive to changes in 11roject and household
input costs but moderately sensitive to changes in output
yield. Thus a 20% increase in Project costs reduces the
overall IRR from 18 to 16%. The corresponding figures for a
20% increase in participating household costs, including
investment costs, and a 20% reduction in output yield are
16% and 12% respectively. Since the yield estimates used in
the analysis are conservative, such a yield decrease is
unlikely.
Figure III-A-I - IRR, Sensitivity Analysis and Financial
Returns to Participating Households
Project
Component
Cropping Systems
Water Resources
Other Systems
Combined
*Discounted at 14%.
ECONOMIC INTERNAL RATE OF RETURN
Basic
19
18
17
18
20% Benefit
20% increase Decrease Cost
In Input Costs In Output Ratio to
Project Farm/HH Yield Farmers*
18
16
14
17
16
14
16 16
12
12
10
2.1
2.4
1.9:1
12 2.1:1
Figure ILL-A-i also indicates that the 1:oject should
be attractive to iacmers: tb financial benefit-cost ratio
to participating farmers is estimated at 2.1:1 for the overall
Project. (See Annex V1-2 for benefit-cost streams.)