How dirty are quick and dirty methods of project appraisal
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How dirty are quick and dirty methods of project appraisal
Public Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal inique van de Walle Dileni GunewardenaThe World Bank Development Research Group35886WPSri-o1908Rojtire ■qu.ck-ĩnd d>-tý' .methods of project appraisal can be so dirty in guiding oroject se’eoon as to w.oe our the -net social gains from puttie irves: meetPolicy Research Working Paper l?08Summary find How dirty are quick and dirty methods of project appraisal ingsRoutine *sjuickand dirty” methods OÍ project appraisal can be sc dirty tn guiding project selection as to Wipe out the net social gains from publiHow dirty are quick and dirty methods of project appraisal
c investment, contend van de Walle and Gunetvardena, illustrating their point with a case study of irrigation projects in Vietnam.They test a Common qPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal ough econometric modeling of marginal rerttrax, which allows for household and area heterogeneity using integrated household level survey data.Ĩ he quick .mJ dirty ir.er.tod performs well :n estimating average benefits nationally but can be misleading lor some regions and. by Ignoring heterogeneity, How dirty are quick and dirty methods of project appraisal overestimates how mush the poor gain.At moderate to high project cost levels. qinck-A'.id-dtrty nukes enough mistakes r<» eliminate the net benefitsHow dirty are quick and dirty methods of project appraisal
from public investment. When irrigating as iittie as 3 percent of Vietnam’s 'tonirrigated land, rhe savings r.oni :!'C mote daia-intensive method -re Public Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal group IO assess I he welfare impacts ol public spending. Copies of the paper are available free from the World Ban <, I 8 IS H Street NW. Washington, DC 20113. Please contact Cyuthia Bernardo, room MC2 501. telephone 20/. zi”i I IfiS, fax 202II'1. Internetaddress cbcntardiXfrworldhank.org. April 1^9 How dirty are quick and dirty methods of project appraisal 8. (.18 pages}T&e /'rtAry A'ivdiez; VVrtiỄíMX J’d/vr Scnei dixuminaus the fuiJinxi ữf utírt hi .orrzpwi to .v;r liM^viJOK J?rifSMfi. A» of the sertftHow dirty are quick and dirty methods of project appraisal
is to iff rte fmdingf out tỊUÌỉtỉy, ,’i en if the Ịrrese>rtữtMiỉf JIT :-fs tha.t fullyfj.'tf&pert carry thỉ namnsof {ìrr! rMÌitữi inii ^!0uld tiled ■iPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal C.Ịtk- w.i'f.i .!; r..urirM* .Ojtw.'iVA r.1 COUMriit they riptfiCUt.Produced by the Policy Research Dissemination CenicrHow Dirty are ’’Quick and Dirty ” Methods of Project Appraisal?Dominique van de Walle and Dileni Gunewardena1Key words: Poverty; Welfare; Project evaluation; Irrigation; Viet NamJ How dirty are quick and dirty methods of project appraisal EL classification: WS: 022; 1391 Dominique van de Walle is with the Development Research Group of the World Bank. Dileni Gunewardena is with the DeparHow dirty are quick and dirty methods of project appraisal
tment of Economics at the University of Peradeniya, Sri Lanka. Correspondence to van de Walle. MC2-507. 18I8H St., NW, Washington. DC. 20433; (tel) 20Public Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal ity changes induced by the project. ‘ Ideally, these estimates will allow for heterogeneity across projects and beneficiaries. Ignoring such heterogeneity—by looking only at aggregates—can bias estimates of both average benefits and their distribution. Typically, however, rapid assessments must be r How dirty are quick and dirty methods of project appraisal esorted to, and die analysis conducted for a representative project and/or beneficiary'. It is recognized that die methods used in practice for assessHow dirty are quick and dirty methods of project appraisal
ing quantity changes in project appraisal simplify reality in this respect; they often ignore household and area heterogeneity, behavioral responses aPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal Would collecting better data, or using better methods, make an appreciable difference to the social welfare outcomes from public investments? Would it be worth investing the extra resources needed to make a more thorough assessment? Indeed, could the deficiencies of commonly used methods be so grea How dirty are quick and dirty methods of project appraisal t as to eliminate the entire social gains from the investments?This paper addresses these questions for a commonly used "quick-and-dirty" (QD) methodHow dirty are quick and dirty methods of project appraisal
for assessing rural infrastructure investments. The QD method we study is a stylized version of the method that is normally used in practice to assessPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal tion in Viet Nam is compared to the marginal benefit estimated by an alternative, more sophisticated econometric method for estimating impacts on farm profits at the farm-household level. We call this the "slow-and-clean" (SC) method. This is closer to a well-defined theoretical ideal, and is about How dirty are quick and dirty methods of project appraisal as sophisticated a method as one would expect to find in a small research project set up for the evaluation task. While it is1not perfect, we believeHow dirty are quick and dirty methods of project appraisal
it represents a distinct improvement, and hence a reasonable test of the conventional QD approachThe comparison of our stylized QD and sc methods alloPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal iteria used to assess the projects themselves. Here we will be concerned with both the impacts on average incomes and the distribution of income. QD methods found in practice often appeal to both efficiency and equity criteria for project selection. For example, appraisals of rural infrastructural p How dirty are quick and dirty methods of project appraisal rojects in developing countries often argue that since the project is to be located in a poor area, it will help reduce poverty. However, this may beHow dirty are quick and dirty methods of project appraisal
quite deceptive. The benefits from physical infrastructure investments will be influenced by a number of factors which will typically be hidden by quiPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal human infrastructure such that the returns to individual households depend in part on the household’s level of human capital (van de Walle 1997). If wealthier households have higher human capital, they may also have higher gains. Returns to irrigation OU the family farm may further depend on househo How dirty are quick and dirty methods of project appraisal ld size and composition in settings with underdeveloped labor markets. The size of landholdings may also matter, again with obvious potential skewnessHow dirty are quick and dirty methods of project appraisal
of benefits. A project analysis which ignores these factors may seriously misinform policy conclusions about the impacts on poverty of public investmPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?Domi How dirty are quick and dirty methods of project appraisal e data which are used to implement the methods. Section 3 then compares and contrasts results obtained by the alternative approaches includingPublic Disclosure AuthorizedPublic Disclosure AuthorizedPolicy Research Working PaperHow Dirty Are “Quick and Dirty” Methods of Project Appraisal?DomiGọi ngay
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