LECTURE 10
OTHER APPRAISALS
SOCIAL APPRAISAL
A social appraisal reviews the project design and the process of project identification through to implementation and monitoring, from a social perspective. Particular attention is paid to the likely impact of the project on different stakeholders, their opportunities for participation, and the project’s contribution to poverty reduction.
1. Stakeholder analysis and participation
Based on the distinction of primary, secondary and key stakeholders, stakeholder analysis reviews the following:
- Who comprise the different stakeholders?
- What are their interests?
- How will they be affected by the proposed project?
- What are the project priorities between the different groups?
- What is their capacity to participate in the project?
Stakeholders have different abilities to influence the outcome of a project . Often target beneficiaries are in a relatively weak position to influence the outcome of a project (at A) whereas much of the control lies in the hands of secondary and key stakeholders (at B). The former may be frustrated by a lack of access to information or be placed in a weak social position due to traditional hierarchies. In contrast the latter may have the time, money, organisational capacity or political power necessary to influence the project; however, if they are not interested in the project, they could pose a risk to the project’s success by withholding support. Thus recommendations from the social appraisal may be to include additional project activities to ensure influential stakeholders support a project and to enable important yet weak stakeholders to become more influential.
2. Poverty focus
Many projects are required to specifically address issues of poverty. In order to ensure the project incorporates a poverty dimension, it is necessary to determine:
• Who are the poor (at community, household and individual level)?
• What are the characteristics of their poverty (in terms of access to and control of resources and benefits, vulnerability and exclusion)?
• How may issues of poverty be addressed in the project?
3. Social organisation
In addition to identifying stakeholders, the social appraisal reviews the way in which a community is organised socially. Appropriate use of existing social organisations could strengthen project implementation. Key questions include:
- What social organisation exists within the community?
- How is it arranged?
- How may it be used to strengthen the project?
ECONOMIC APPRAISAL
This includes an analysis of economic soundness of the project and the quantification and valuation of costs and benefits to ensure financial viability
1 Social Cost Benefit Analysis:
Cost Benefit Analysis (CBA) is used for determining the attractiveness of a proposed investment in terms of the welfare of society as a whole. By presenting social benefits and costs in a monetary format, CBA not only facilitates choices between alternative investment options but also gives an idea of the project worth. The technique is principally used with regard to public sector investments. CBA differs from financial appraisal which views an investment solely from the perspective of individual participants, focusing on private benefits and costs and using market prices. In contrast, CBA adopts a much broader approach, considering both monetary and non-monetary benefits and costs, and uses prices that more accurately reflect economic, environmental and social values. The divergence between private and social costs and benefits arises for three reasons:
• Not all costs and benefits fall on the immediate group of individual participants; some may have wider impacts (known as externalities)
• Not all costs and benefits have market prices
• Not all market prices reflect the true costs and benefits to society. Nevertheless, once social costs and benefits have been identified and valued, the methodology for conducting a CBA follows a similar procedure to financial appraisal. Choices between investment options may be based on a comparison of Net Present Values at the test discount rate, the Internal Rate of Return, payback periods, and benefit: cost ratios.
ENVIRONMENTAL APPRAISAL (ENVIRONMENTAL IMPACT ASSESSEMENT)
Environmental Assessment (EA) is supposed to provide the project analyst with a good quantification of the biophysical and social impacts from developments. Environmental Assessment generally refers to the broader system of environmental analysis, including project-specific Environmental Impact Assessment (EIA). Most countries have an EIA policy and supporting legislation. Traditionally, EIA was designed to operate at the project level; that is to identify impacts and mitigation measures for an individual project. In the past several years however, the EIA process has gradually been extended to sectoral levels, strategic reviews of policy, and even at a global level. This section will briefly discuss focus on project EIA. Project-Level EA (Usually Called Environmental Impact Assessment EIA) Project-level EA (usually called EIA) generally refers to the environmental assessment of a single project, such as one highway or a cement factory. Definition of EIA There are many definitions of EIA. The following are the sample of some of these definitions which indicate the We can summarise these definitions as follows: EIA is defined as the process of evaluating the direct and indirect environmental and social implications of a proposed development project. Or the systematic examination of the likely environmental consequences of proposed projects
The results of the assessment - which are assembled in a document known as an Environmental Statement - are intended to provide decision-makers with a balanced assessment of the environmental implications of the proposed action and the alternative examined. The ES is then used by decision-makers as a contribution to the information base upon which a decision is made. The overall goal of an EIA is to achieve better developmental interventions through protecting the environment (human, physical and biotic).
Reasons for Using EIA
EIA has been developed as a result of the failure of traditional project appraisal techniques to account for environmental impacts. Many development projects in the past were designed and constructed in isolation from any consideration of their impacts on the environment, resulting in:
• Higher costs,
• Failure of projects,
• Significant environmental change, and
• Negative social effects nature of the process
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