FFEM Componen 2 Mehods and ools for socio-economic assessmen of goods and services provided by Medierranean fores ecosysems Evaluaion mehods Cos-benefi analysis and muli-crieria analysis issues and implemenaion Regional workshop Tunis, 2-5 June 2014 Fabrice GOURIVEAU Nicolas ROBERT
Ouline Muli-crieria analysis, Cos benefi analysis and oher mehods Goals and main differences Muli-crieria analysis Principle & sor example Cos Benefi analysis Principle Example 2
Evaluaion of decisions Labour T/ Maerial Energy Q/ Q/ Transformaion sysem Produc 1 Produc 2 Q/ Q/ Capial Q/,O Exernaliy 1 Q? Exernaliy 2 Q?? 3
Evaluaion mehods Tools o suppor decisions Moneary only Cos-Effeciveness Analysis (CEA) C Cos-Benefi Analysis (CBA) B C wih B=(Vx 2 Vx 1 )+(Vy 2 Vy 1 )+(Vz 2 Vz 1 ) Indicaor-based Muli-Crieria Analysis (MCA) (B,C) wih B=(x 2 x 1 )+(y 2 y 1 )+(z 2 z 1 ) z Life Cycle Analysis (LCA) Projec/produc level Objecive sae 2 x 2,y 2,z 2 y x Iniial sae x 0,y 0,z 0 C C B Objecive sae 1 x 1,y 1,z 1 4
Muli-crieria analysis Objecive: o srucure a complex decision problem o compare differen managemen alernaives When o use i? muli-objecive or muliple crieria heerogeneous ses of crieria conflicing objecives Expeced resuls: raional, ransparen, and comprehensive analysis qualiaive and quaniaive daa a differen scales 5
MCA: seps Sep 1: Aim of he MCA, key players Sep 2: Idenify alernaives Sep 3: Idenify crieria / consequences of each alernaive Sep 4: Esimae performance of each alernaive agains he crieria? Sep 5: Weigh crieria / relaive imporance Sep 6: Weigh combinaions of crieria overall scores Sep 7: Compare alernaives, prepare recommendaions Alernaive 1 Person 1 Person 2 Person 3 Score Weigh Score Weigh Score Weigh Crierion A +1 1 0 1 +1 1 Crierion B 0 1 +1 1-1 0 Crierion C -1 1 0 2 +1 1 Toal score 0 0.25 1 6
MCA: Srenghs and weaknesses Srenghs Includes impacs on non-moneary values Faciliaes sakeholder involvemen More ransparen appraisal and decision-making process Can lead o a lis of opimum choices Weaknesses No buil-in sandard value (projec specific values) Limied comparisons beween sudies Requires well developed paricipaion processes Srongly depends on sakeholders willingness o paricipae 7
Cos benefi analysis Objecive: assess he relaive desirabiliy of compeing alernaives Exension of privae CBA When o use i? Analyze alernaive policies / pracices All variaions in he provision of goods and (dis-)services can be esimaed in moneary erms Expeced resuls: Esimaes of he ne presen value; cos/benefis raios; inernal rae of reurns; payback periods 8
Cos benefi analysis Direc coss and benefis Privae CBA Excl. ransfer paymens Incl. ransfer paymens Adjusmen for imperfec compeiion and oher disorions Social CBA (wihou environmenal impacs) Assessmen of environmenal impacs Social CBA (wih environmenal impacs) 9
CBA Scope Incenives Labour Profi Maerial Energy Capial Transformaion Transformaion sysem Transformaion sysem Transformaion sysem sysem Produc 1 Produc 2 Exernaliy 1 Sociey Exernaliy 2 Benefis 10
CBA: Sages Sep 1: Even, projec or policy definiion Sakes and possible problems Drivers of change and levers / acors (who can decide/ac?) Scenarios: base case & alernaives, ime horizon Sep 2: Idenificaion of relevan projec impacs Resources used / Poenial impacs on marke and economic parameers and on surrounding environmen NB: marginal effecs / addiionnaliy principle Sep 3: Physical quanificaion of relevan impacs Wha changes, which quaniies/qualiy and when? 11
EURO CBA: Sages Sep 4: Moneary valuaion of relevan impacs Marginal values of he changes Sep 5: Discouning of coss and benefis social discoun rae: 10 000 8 000 6 000 4 000 Social ime preference rae r = ng + p, p: rae of pure iner-emporal preference (uiliy discoun rae), n elasiciy of marginal uiliy of consumpion g: growh rae of per capia real consumpion Opporuniy cos of capial r=1% r=3% r=5% r=10% 2 000 0 0 5 10 15 20 25 30 35 40 Year 12
CBA: Sages Sep 6: Calculaing he CBA performance indicaors Sep 7: Performing sensiiviy analysis Make recommendaions based on indicaors and he sensiiviy analysis 13 T T T d C d B d S S NPV 0 0 0 1 1 1 ) ( 0 1 0 T IRR S IRR T T d C d B BCR 0 0 1 1 0 1 1 0 0 T T PayBack d C d B T T
CBA: Srenghs and weaknesses Srenghs Based on well-undersood heoreical foundaions Buil-in sandard for value (moneary erms) Limied o beneficiaries which acually value he impac Common mehodology: ransferabiliy o oher sudies Adaped o benefi ransfer Weaknesses Limied only o impacs measurable in moneary erms Srong influence of he seleced CBA parameers (e.g., discoun rae, projec duraion, coss and benefis considered) 14
FFEM Componen 2 Mehods and ools for socio-economic assessmen of goods and services provided by Medierranean fores ecosysems Puing Cos-benefi analysis ino pracice Regional workshop Tunis, 2-5 June 2014 Fabrice GOURIVEAU Nicolas ROBERT
Examples Example 1: Social benefis of an afforesaion projec Sudy using he resuls of a choice experimen valuaion Example 2: Coss and benefis of he naura 2000 nework Effec of an EU level policy 16
Example 1: Social benefis of an afforesaion projec Sep 1: Even, projec or policy definiion Afforesaion on abandoned agriculural land Land owners / Managers Financed by beneficiaries Sep 2: Idenificaion of relevan projec impacs Posiive impacs (benefis): Increased fores area Increased carbon sequesraion, Increased diversiy of plan species recreaion access Negaive impacs (coss): Iniial invesmen Increased mainenance coss (Mavsar, 2012) 17
Example 1: Social benefis of an afforesaion projec Sep 3: Physical quanificaion of relevan impacs Benefi Alernaive 1 Alernaive 2 Alernaive 3 Fores area + 5% + 15% + 25% (140,000 ha) (420,000 ha) (700,000 ha) Number of addiional plan species +40 +90 +140 Recreaion access No Yes Yes Quaniy of addiionaly sequesraed CO 2 +9,320 CO 2 +18,640 CO 2 +27,960 CO 2 Sep 4: Moneary valuaion of relevan impacs Benefi Uni Marginal Value ( /year/person) Fores area Ha 9.58 Plan Species 0.65 Recreaion having access 38.60 CO 2 CO 2 0.0053 18
Example 1: Social benefis of an afforesaion projec Sep 5: Discouning of coss and benefis Year Cos (in ) Ne presen value of cos (in ) Benefi (in ) Ne presen value of benefi (in ) Ne presen value (in ) 0 10688.8 10688.8 0.0 0.0-10688.8 1 0.0 0.0 0.0 0.0-10688.8 2 0.0 0.0 0.0 0.0-10688.8 3 0.0 0.0 0.0 0.0-10688.8 4 0.0 0.0 0.0 0.0-10688.8 5 534.4 461.0 0.0 0.0-11149.8 6 0.0 0.0 0.0 0.0-11149.8 7 0.0 0.0 0.0 0.0-11149.8 8 0.0 0.0 0.0 0.0-11149.8 9 0.0 0.0 0.0 0.0-11149.8 10 534.4 397.7 0.0 0.0-11547.4 ----- ------------------ ------------------ ---------------- ------------------ ------------------ 42 0.0 0.0 17597.6 5085.0 106046.8 43 0.0 0.0 17597.6 4936.9 110983.7 44 0.0 0.0 17597.6 4793.1 115776.8 45 534.4 141.3 17597.6 4653.5 120289.0 19
Example 1: Social benefis of an afforesaion projec Sep 6: Calculaing he CBA performance indicaors Sep 7: Performing sensiiviy analysis Indicaor Alernaive 1 Alernaive 2 Alernaive 3 Discoun rae=3% NPV 184,323 152,116 120,289 B/C raio 15.0 12.6 10.1 IRR 7.69% 6.88% 5.88% Discoun rae=1% NPV 372,281 309,206 246,874 B/C raio 26.7 22.4 18.1 IRR 10.23% 9.45% 8.52% Discoun rae=5% NPV 91,119 74,236 57,550 B/C raio 8.3 7.0 5.6 IRR 5.04% 4.15% 3.02% Recommendaions? 20
Example 2: Social benefis of an afforesaion projec Sep 1: Even, projec or policy definiion Afforesaion on abandoned agriculural land Land owners / Managers Financed by beneficiaries Sep 2: Idenificaion of relevan projec impacs Posiive impacs (benefis): Increased fores area Increased carbon sequesraion, Increased diversiy of plan species recreaion access Negaive impacs (coss): Iniial invesmen Increased mainenance coss 21