Welcome to Our Presentation On Social Cost Benefit Analysis

Group No.-6

Presentation On Social Cost Benefit Analysis

Group No.-6

Tazim Ibne Chowdhury Md. Mashuqur Rahman Md. !bdu" !had Md. !ri$ur Rahman %ewe" 'mme Ruman

9020 90 6 906# 906& 9#6

Commercial Cost Benefit Analysis (CBA)

To*a" .os* o$ *he pro1e.* 23pe.*ed $u*ure bene$i* $rom *he pro1e.*

( )ene$i* + Cos* is desirab"e here. ( ,o i* is no*hin- bu* a pro$i*abi"i*y ana"ysis. ( )u* wha* wi"" be *he .os*s and/or *he bene$i*s *ha* a so.ie*y may ha0e *o bear and/or -e* $rom *he proposed pro1e.* are no* .onsidered here.

For example: ( ,uppose4 a manu$a.*urer produ.es .i-are**es and se"" i* *5.60 a pa.5e*4 and ano*her manu$a.*urer produ.es soaps and se"" i* *5.20 a bar. Now4 i$ we *hin5 abou* *he impa.* o$ soaps 7 .i-are**es on *he so.ie*y4 *he ques*ions may be 8 9 :oes *he pri.e o$ .i-are**es *a5e a..oun* o$ *he smo5ers; hi-her probabi"i*y o$ hear* disease or .an.er< 9 :oes *he pri.e o$ soap *a5e no*e o$ *he bene$i*s $rom *he use o$ soap4 e.-.4 redu.ed ris5 o$ spread diseases< =b0ious"y4 a .ommer.ia" en*repreneur .an;* -i0e we"" answer *o *hese ques*ions.

What is Social Cost Benefit Analysis ?

( ,o4 *o re$"e.* *he rea" 0a"ue o$ a pro1e.* *o so.ie*y4 we mus* .onsider *he impa.* o$ *he pro1e.* on so.ie*y. Impa.* >osi*i0e ?,o.ia" )ene$i*@ Ne-a*i0e ?,o.ia" Cos*@

Thus 4when we e0a"ua*e a pro1e.* $rom *he 0iew poin* o$ *he so.ie*y ?or e.onomy@ as a who"e4 i* is .a""ed ,o.ia" Cos* )ene$i* !na"ysis ?,C)!@/2.onomi. !na"ysis.

Core differences between CBA & SCBA

CBA Limited range o$ e$$e.*s are .onsidered as i* measures *he pro$i*abi"i*y o$ indi0idua"s who are on"y a par* o$ *he so.ie*y. I* is quan*i*a*i0e in na*ure.

SCBA The e0a"ua*or has *o *a5e a wider view as i* *ries *o measure so.ia" 0a"ues o$ *he who"e so.ie*y.

I* .an be quan*i*a*i0e or qua"i*a*i0e.

Scope of SCBA
( ,C)! .an be app"ied *o bo*h >ub"i. 7 pri0a*e in0es*men*s 8 9 >ub"i. In0es*men*A ,C)! is impor*an* spe.ia""y $or *he de0e"opin.oun*ries where -o0*. p"ays a si-ni$i.an* ro"e in *he e.onomi. de0e"opmen*. 9 >ri0a*e In0es*men*A Bere4 ,C)! is a"so impor*an* as *he pri0a*e in0es*men*s are *o be appro0ed by 0arious -o0ernmen*a" 7 quasi--o0ernmen*a" a-en.ies.

Ob ecti!es of SCBA
The main $o.us o$ ,o.ia" Cos* )ene$i* !na"ysis is *o de*ermineA #. 2.onomi. bene$i*s o$ *he pro1e.* in *erms o$ shadow pri.esC 2 The impa.* o$ *he pro1e.* on *he "e0e" o$ sa0in-s and in0es*men*s in *he so.ie*yC D. The impa.* o$ *he pro1e.* on *he dis*ribu*ion o$ in.ome in *he so.ie*yC 6. The .on*ribu*ion o$ *he pro1e.* *owards *he $u"$i""men* o$ .er*ain meri* wan*s ?se"$- su$$i.ien.y4 emp"oymen* e*.@.

Si"nificances of SCBA
( C)! is unab"e *o re$"e.* so.ia" 0a"ues. Ben.e ,C)! has been emer-ed wi*h some in*eres*in- si-ni$i.an.es. These si-ni$i.an.es a"so ma5e *he ,C)! di$$eren* $rom *he C)!. Mar5e* Imper$e.*ions 23*erna"i*ies Ta3es 7 ,ubsidies Con.ern $or ,a0in-s Con.ern $or Redis*ribu*ion Meri* Ean*s

Si"nificances of SCBA (Contd#)

( Mar5e* Imper$e.*ionsA Mar5e* pri.es4 *he basis $or C)!4 do no* re$"e.* *he so.ia" 0a"ues under imper$e.* mar5e* .ompe*i*ion. ( 23*erna"i*iesA ! pro1e.* may ha0e bene$i.ia" or harm$u" e3*erna" e$$e.*s *ha* are .onsidered in ,C)!4 no* in C)!. ( Ta3es 7 ,ubsidiesA From *he so.ia" poin* o$ 0iew4 *a3es 7 subsidies are no*hin- bu* *rans$er paymen*s. )u* in C)!4 *a3es 7 subsidies are *rea*ed as mone*ary .os*s and bene$i*s respe.*i0e"y.

Si"nificances of SCBA (Contd#)

Con.ern $or ,a0in-sA In ,C)!4 *he di0ision be*ween bene$i*s 7 .onsump*ion is re"e0an* wherein hi-her 0a"ua*ion is p"a.ed on sa0in-s. )u* in C)! su.h di0ision is irre"e0an*. Con.ern $or Redis*ribu*ionA In ,C)!4 *he dis*ribu*ion o$ bene$i*s is 0ery mu.h .on.ernin- issue where .ommer.ia" pri0a*e $irm does no* bo*her abou* i*. Meri* Ean*sA Meri* wan*s are impor*an* $rom *he so.ia" poin* o$ 0iew and *here$ore4 ,C)! .onsiders *hese wan*s.

Approaches to SCBA
( There are *wo prin.ipa" approa.hes $or ,o.ia" Cos* )ene$i* !na"ysis. !. 'NI:= !pproa.h4 and ). G-M !pproa.h.

!. 'NI:= !pproa.hA
This approa.h is main"y based on *he pub"i.a*ion o$ 'NI:= ?'ni*ed Na*ion Indus*ria" :e0e"opmen* =r-aniza*ion@ named Guide to Practical Project Appraisal in #9H&.

). G-M !pproa.hA
I.M.: Gi**"e 7 %.!.Mir"ees ha0e de0e"oped *his approa.h $or ana"ysis o$ ,o.ia" Cos*-)ene$i* in Manual of Industrial Project Analysis in Developing Countries and Project Appraisal & Planning for Developing Countries.

$%&'O Approach
The 'NI:= approa.h o$ ,o.ia" Cos* )ene$i* !na"ysis in0o"0es $i0e s*a-esA ( Ca".u"a*ion o$ financial profitability o$ *he pro1e.* measured a* mar5e* pri.es. ( =b*ainin- *he ne* bene$i* o$ *he pro1e.* a* shadow efficiency! prices. ?=b1e.*i0e o$ ,C)!-#@ ( !d1us*men* $or *he impa.* o$ *he pro1e.* on "avings & Invest#ent. ?=b1e.*i0e o$ ,C)!-2@ ( !d1us*men* $or *he impa.* o$ *he pro1e.* on Inco#e Distribution. ?=b1e.*i0e o$ ,C)!-D@ ( !d1us*men* $or *he impa.* o$ *he pro1e.* on Merit and De#erit Goods whose so.ia" 0a"ues di$$er $rom *heir e.onomi. 0a"ues. ?=b1e.*i0e o$ ,C)!-6@

$%&'O Approach (Contd#)

,*a-e-#A Ca".u"a*ion o$ $inan.ia" pro$i*abi"i*y o$ *he pro1e.* ! -ood *e.hni.a" and $inan.ia" ana"ysis mus* be done be$ore a meanin-$u" e.onomi. ?so.ia"@ e0a"ua*ion .an be made so as *o de*ermine $inan.ia" pro$i*abi"i*y. Finan.ia" pro$i*abi"i*y is indi.a*ed by *he Ne* >resen* Ia"ue ?N>I@ o$ *he pro1e.*4 whi.h is measured by *a5inin*o a..oun* inpu*s ?.os*s@ and ou*pu*s ?bene$i*s@ a* mar5e* pri.e.

$%&'O Approach ) Sta"e One (Contd#)

Ne* >resen* 0a"ue o$ a >ro1e.* is .a".u"a*ed asA

Bere4 $t J Ia"ue o$ ou*pu*s a* mar5e* pri.e a* *ime t Ct J Ia"ue o$ inpu*s a* mar5e* pri.e a* *ime t % & :is.oun* Ra*e ' & Gi$e*ime o$ *he pro1e.* I( & Ini*ia" .os* a* *he s*ar* o$ *he pro1e.*. The pro1e.* is 0iewed as $inan.ia""y $easib"e i$ N>I + 0.

$%&'O Approach (Contd#)

,*a-e-2A =b*ainin- *he ne* bene$i* o$ *he pro1e.* a* e.onomi. ?shadow@ pri.es The Commer.ia" >ro$i*abi"i*y ana"ysis ?.a".u"a*ed in s*a-e - #@ wou"d be su$$i.ien* on"y i$ *he >ro1e.* is opera*ed in per$e.* mar5e*. )e.ause4 on"y in a per$e.* mar5e*4 mar5e* pri.es .an re$"e.* *he so.ia" 0a"ue. I$ *he mar5e* is imper$e.* ?mos* o$ *he .ases in rea"i*y@4 ne* bene$i* o$ *he >ro1e.* is de*ermined by assi-ninshadow pri.es *o inpu*s and ou*pu*s. There$ore4 de0e"opin- shadow pri.es is 0ery mu.h 0i*a".

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.es re$"e.* *he rea" 0a"ue o$ a resour.e ?inpu* or ou*pu*@ *o so.ie*y. ,hadow >ri.es are a"so re$erred as e.onomi. pri.es4 a..oun*in- pri.es4 e.onomi./a..oun*in- e$$i.ien.y pri.es e*.. ,hadow >ri.es .an be de$ined as *he 0a"ue o$ *he .on*ribu*ion *o *he .oun*ry;s basi. so.io-e.onomi. ob1e.*i0es made by any mar-ina" .han-e in *he a0ai"abi"i*y o$ .ommodi*ies ?0u*pu*@ or $a.*or o$ produ.*ion ?inpu*@. 23amp"eA A project of power station #ay increase the production of electricity which contributes to one of the socio)econo#ic objectives of the country.

$%&'O Approach ) Sta"e *wo (Contd#)

Genera" >rin.ip"es o$ ,hadow >ri.inNumeraire : ! uni* o$ a..oun* in whi.h *he 0a"ues o$ inpu*s and ou*pu*s are *o be e3pressed. Numeraire is de*ermined a* :omes*i. .urren.y ?):T@ ra*her *han border pri.e. >resen* 0a"ue ra*her *han $u*ure 0a"ue. )e.ause4 *a bird in the hand is worth two in the bush.+ Cons*an* pri.e ra*her *han .urren* pri.e.

$%&'O Approach ) Sta"e *wo (Contd#)

Genera" >rin.ip"es o$ ,hadow >ri.in- ?Con*d.@ Tradability:
Tradabi"i*y re$ers *o whe*her a -ood or ser0i.e is *radab"e or non-*radab"eC i$ *radab"e whe*her is $u""y *raded or non-*raded. ! -ood/ser0i.e is *radab"e in *he absen.e o$ or wi*hin "imi*ed *rade barriers. ! *radab"e -ood/ser0i.e is a.*ua""y *raded when *he impor* ?e3por*@ supp"y is per$e.*"y e"as*i. o0er *he re"e0an* ran-e o$ 0o"ume. a"" addi*iona" demand ?produ.*ion@ mus* be made ?.onsumed@ by impor* ?e3por*@ due *o *he $u"" .apa.i*y in *he domes*i. indus*ry ?$u"$i""men* o$ demand by domes*i. .onsumer@.

$%&'O Approach ) Sta"e *wo (Contd#)

Genera" >rin.ip"es o$ ,hadow >ri.in- ?Con*d.@ *he impor* ?CIF@ pri.e is "ess or *he e3por* ?F=)@ pri.e is more *han *he domes*i. .os* o$ produ.*ion. ! -ood/ser0i.e is non-*radab"eC i$ i*s impor* ?CIF@ pri.e is -rea*er *han i*s domes*i. .os* o$ produ.*ion4 and/or i*s e3por* ?F=)@ pri.e is "ess *han i*s domes*i. .os* o$ produ.*ion. ! *radab"e -ood/ser0i.e *ha* is no* a.*ua""y *raded is .a""ed non-*raded.

$%&'O Approach ) Sta"e *wo (Contd#)

Genera" >rin.ip"es o$ ,hadow >ri.in- ?Con*d.@ Sources o S!adow "ricing: :ependin- on *he impa.* o$ *he pro1e.* on na*iona" e.onomy4 *here are *hree sour.es o$ shadow pri.in-A
#mpact o t!e pro$ect on National %conomy From produ.*ion o$ ou*pu* an-"e In.rease *o*a" .onsump*ion in *he e.onomy :e.rease produ.*ion in o*her par*s o$ *he e.onomy :e.rease impor*s or in.rease e3por*s From .onsump*ion o$ inpu* an-"e :e.rease .onsump*ion in *he res* o$ *he e.onomy Consumer;s wi""in-ness *o pay Sources o S!adow "ricing

In.rease produ.*ion wi*hin *he Cos* o$ produ.*ion e.onomy In.rease impor*s or de.rease e3por*s Forei-n 23.han-e Ia"ue ?)order >ri.e@

$%&'O Approach ) Sta"e *wo (Contd#)

Genera" >rin.ip"es o$ ,hadow >ri.in- ?Con*d.@ Taxes: I$ *he pro1e.* au-men*s domes*i. produ.*ion4 *a3es shou"d be e3."udedC I$ *he pro1e.* .onsumes e3is*in- $i3ed supp"y o$ non*raded inpu*s4 *a3 shou"d be in."udedC For $u""y *raded -oods4 *a3 shou"d be i-nored. &onsumer 'illingness to "ay (&'"): Eha* a .onsumer wan*s *o spend $or a produ.* or ser0i.e. The di$$eren.e be*ween CE> and a.*ua" paymen* is .a""ed .onsumer surp"us.

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es Tradable inputs * outputs:
Tradability Type o Goods Inpu* Traded 23por* Impor* 23por* de.reased Impor* in.reased 23por* in.reased Impor* de.reased =u*pu* )order >ri.e Ia"ue o$ 23por* ?F=)@ Cos* o$ Impor* ?CIF@ S!adow "rices

For a $u""y *raded -ood4 *he shadow pri.e is border pri.e *rans"a*ed in*o *he domes*i. .urren.y a* shadow $orei-n e3.han-e.

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ !ssumin- *ha* a pro1e.* uses *wo indi-enous equipmen*s .os*in- T5. 4004000. These equipmen*s .an be e3por*ed a* K#04000. The shadow $orei-n ra*e o$ K #.00 is equi0a"en* *o T5. 6&. There$ore4 shadow pri.e o$ *hese equipmen*s ?inpu*s@ are ?K#04000 L T5.6&@ J T5. 64&04000.

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ Non-Tradable #nputs * +utputs:
Tradability Type o Goods Inpu* Non-Traded: >rodu.*ion More $rom "o.a" produ.ers Gess *o o*her "o.a" users Gess by o*her "o.a" produ.ers Cos* o$ >rodu.*ion =u*pu* S!adow "rices

Consump*ion

More *o "o.a" users Consumer;s wi""in-ness *o pay

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ !ssumin- *ha* $or a pro1e.*4 one-ha"$ o$ *he required inpu* is .o""e.*ed $rom addi*iona" domes*i. produ.*ion whi.h has a domes*i. .os* o$ T5. 24004000 and *he res* one-ha"$ is .o""e.*ed $rom di0ersion $rom o*her .onsumers who are wi""in- *o pay T5. D4004000. There$ore4 *he shadow pri.e o$ *he inpu*s wi"" beA ?.os* o$ produ.*ion M .onsumer;s wi""in-ness *o pay@ J T5. ?24004000 M D4004000@ J T5. 4004000

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@
Tradability Type o Goods Inpu* Non-Traded: >rodu.*ion More $rom "o.a" produ.ers Gess *o o*her "o.a" users Less by ot!er local producers ,ore to local users Cos* o$ >rodu.*ion =u*pu* S!adow "rices

Consump*ion

Consumer;s wi""in-ness *o pay

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ !ssumin- *ha* a new"y es*ab"ishes power s*a*ion ha0ina *o*a" .apa.i*y o$ #00 mi""ion uni*s o$ e"e.*ri.i*y4 .har-es *ari$$ a* T5. # $or per uni* e"e.*ri.i*y .onsump*ion. The .onsumers o$ *ha* par*i.u"ar area are wi""in- *o pay T5. #.20 $or per uni*. There$ore4 *he shadow pri.e is ?T5. #.20 L #0 mi""ion@ J T5. #20 mi""ion4 ins*ead o$ T5. #00 mi""ion.

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ %xternalities: !n e3*erna"i*y is an e3*erna" e$$e.* ?ei*her bene$i.ia" or harm$u"@ .auses $rom a pro1e.* whi.h is 8 no* de"ibera*e"y .rea*ed by *he pro1e.* sponsors bu* is an in.iden*a" ou*.ome. beyond *he .on*ro" o$ *he persons who are bene$i*ed or a$$e.*ed by i*. no* *raded in *he mar5e* p"a.e

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ %xample o %xternal % ects: Near abou* #004000 peop"e had "os* "ands 46&0 a.res due *o *he pro1e.* o$ %amuna )rid-e. >eop"e may be a$$e.*ed by erosion and $"ood .ondi*ions brou-h* abou* by .han-es *o *he ri0er whi.h resu"* $rom *he .ons*ru.*ion a.*i0i*ies o$ a brid-e. 2n0ironmen*a" po""u*ion .rea*ed by bri.5 $ie"d. ! pro1e.* o$ p"an*in- *rees $or .ommer.ia" purpose may -i0e pro*e.*ion *o *he en0ironmen* a-ains* *he in.reasin- -"oba" warm*h.

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ S!adow "ricing o %xternalities: !"*hou-h 0a"ua*ion o$ e3*erna" e$$e.*s is di$$i.u"* as *hey are o$*en in*an-ib"e in na*ure and *here is no mar5e* pri.e4 shadow pri.in- o$ e3*erna"i*ies may be made indire.* means su.h as A The harm$u" e$$e.* o$ *he brid-e may be measured by *he .onsumer wi""in-ness *o pay $or *he ou*pu* o$ *he peop"e whi.h has been redu.ed due *o *he brid-e. The .os* o$ po""u*ion may be es*ima*ed in *erms o$ *he "oss o$ earnin-s as a resu"* o$ dama-e *o hea"*h .aused by i*.

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ GaborA
"ossible #mpact
#. Ta5in- "abor away $rom o*her emp"oymen*s 2. ,*imu"a*in- *he produ.*ion o$ new wor5ers

S!adow "rice (Social &ost) o Labor

Ei""in-ness *o pay o$ o*her users $or *his "abor *he 0a"ue assi-ned by *he wor5er on *he "eisure *ha* he has $ore-o. *he addi*iona" .onsump*ion o$ $ood *he .os* o$ *ranspor* ne-a*i0e impa.* on sa0in-s and in0es*men*s due *o *he in.reased .onsump*ion by wor5ers *he .os* o$ *rainin *he .os* o$ urbaniza*ion F"i-h*in- o$ $orei-n .urren.y equi0a"en* *o *he wa-es .ommanded by *hem a"on- wi*h a premium on a..oun* o$ *he $orei-n e3.han-e.

D. Impor*in- wor5ers

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?.on*d.@ &apital: In0es*men* o$ .api*a" in a pro1e.* .auses *o happen *wo *hin-sA i. Finan.ia" resour.es are .on0er*ed in*o physi.a" asse*s ii. Finan.ia" resour.es are wi*hdrawn $rom na*iona" poo" o$ sa0in-s. Thus a"*erna*i0e pro1e.*s are $ore-one and *here is an oppor*uni*y .os* o$ i*. The shadow pri.e o$ physi.a" asse*s is .a".u"a*ed in *he same manner in whi.h inpu*s and ou*pu*s are .a".u"a*ed. The oppor*uni*y .os* o$ .api*a" ?shadow pri.e o$ .api*a"@ depends on *he sour.e $rom whi.h *he .api*a" has -enera*ed.

$%&'O Approach ) Sta"e *wo (Contd#)

,hadow >ri.in- o$ Resour.es ?Con*d.@
Generation o &apital +pportunity &ost o &apital

Genera*ion $rom addi*iona" Consump*ion ra*e o$ in*eres* or so.ia" sa0in-s dis.oun* ra*e ?*he pri.e mus* be paid *o *he sa0er *o sa.ri$i.e presen* .onsump*ion@ Genera*ion $rom *he denia" In0es*men* ra*e o$ in*eres* o$ .api*a" *o a"*erna*i0es ?In0es*men* ra*e o$ re*urn *ha* wou"d pro1e.*s be earned $rom *hose a"*erna*i0e pro1e.*s@

$%&'O Approach ) Sta"e *wo (Contd#)

=b*ainin- Ne* )ene$i* o$ *he >ro1e.* a* ,hadow >ri.es :e*erminin- *he shadow pri.e o$
=ne-,ho* Cos*s !nnua" .os*s !nnua" bene$i*s

Ca".u"a*in- Ne*-bene$i* o$ *he pro1e.* $rom so.ia" poin* o$ 0iew by A

-ere. Vt / S!adow price o 0ene it at time t Ct / S!adow price o +perating %xpenses at time t K = Social 1iscount 2ate T = Li etime o t!e pro$ect I0 = #nitial cost at t!e start o t!e pro$ect.

$%&'O Approach ) Sta"e *wo (Contd#)

=b*ainin- Ne* bene$i* o$ *he >ro1e.* ?!n i""us*ra*ion@ The Go0ernmen* is .onsiderin- a pro1e.* whi.h wou"d supp"y wa*er $or irri-a*ion4 -enera*e e"e.*ri.i*y and pro0ide a measure o$ pro*e.*ion a-ains* $"oods. The pro1e.* is e3pe.*ed *o ha0e a 2 year "i$e *ime. The .os*s and bene$i*s o$ *he pro1e.* areA &+STS: #. >ower equipmen* .os*in- T5. D0 .rore. ?!ddi*iona" In$orma*ionA This equipmen* .an be e3por*ed a* K 6. mi""ion. The shadow pri.e o$ per do""ar is T5. H0@
&ost Type Indi-enous >ower 2quipmen* Nature =ne-,ho* "rivate 3ngle (,ar4et price) D0 .rore Social 3ngle (S!adow "rice) D#. .rore

$%&'O Approach ) Sta"e *wo (Contd#)

=b*ainin- Ne* bene$i* o$ *he >ro1e.* ?!n i""us*ra*ion@ 2. D04000 *ones o$ .emen* produ.ed indi-enous"y are used in *he pro1e.* a* a .os* o$ T5. 64000. ?!ddi*iona" In$orma*ionA Bowe0er4 one-ha"$ o$ *he .emen* wi"" .ome $rom addi*iona" domes*i. produ.*ion whi.h .os* T5. 4000 per *one and one-ha"$ .ome $rom di0ersion $rom o*her .onsumers who are wi""in- *o pay T5.64 00 $or per *on.@
&ost Type Cemen* Nature =ne-,ho* "rivate 3ngle (,ar4et price) #& .rore Social 3ngle (S!adow "rice) #H.2 .rore

Obtainin" %et benefit of the Pro ect An illustration (contd#)

D. =*her .ons*ru.*ion ma*eria"s ? sand4 bri.5s4 s*ee" e*..@ .os* 20 .rore. ?!ddi*iona" In$orma*ionA *hese ma*eria"s .omes $rom addi*iona" produ.*ion4 produ.*ion .os* o$ whi.h is # .rore.@
&ost Type =*her Ma*eria"s Nature =ne-,ho* "rivate 3ngle (,ar4et price) 20 .rore Social 3ngle (S!adow "rice) # .rore

Obtainin" %et benefit of the Pro ect An illustration (contd#)

6. Two mi""ion man days o$ uns5i""ed "abor $or whi.h *he pro1e.* .ommi**ee de.ided *o pay a dai"y wa-e o$ T5. #00. ?!ddi*iona" In$orma*ionA The shadow pri.e o$ uns5i""ed "abor is &0 T5. >er day@
&ost Type Nature "rivate 3ngle (,ar4et price) 20 .rore Social 3ngle (S!adow "rice) #6 .ore

'ns5i""ed Gabor

=ne-,ho*

Obtainin" %et benefit of the Pro ect An illustration (contd#) . ,5i""ed "abor .os*in- T5. .rore. ? Bowe0er4 *his .os* re$"e.*s wha* o*hers are wi""in- *o pay $or *he s5i""ed "abor@
&ost Type Nature "rivate 3ngle (,ar4et price) .rore Social 3ngle (S!adow "rice) .rore

,5i""ed "abor

=ne-,ho*

6. =pera*in- 7 Main*enan.e .os* o$ *he pro1e.* wi"" be T5.

H. .rore annua""y. ?Bowe0er4 *he opera*in- .os* shou"d be T5. 6. .rore $rom so.ia" 0iew poin*@
&ost Type =pera*in- Cos* Nature !nnua" "rivate 3ngle H. .rore Social 3ngle 6. .rore

Obtainin" %et benefit of the Pro ect An illustration (contd#) 0ene its: #. 0. mi""ion a.res o$ "and wi"" be irri-a*ed. The Go0ernmen* wi"" .har-e *he wa*er "e0y a* T5. # 0 $or per a.re. ?!ddi*iona" In$orma*ionA The 0a"ue o$ addi*iona" ou*pu* per a.re due *o *he irri-a*ion wi"" be T5. 00 per a.re@.
0ene it Type Nature "rivate 3ngle (,ar4et price) H. .rore Social 3ngle (S!adow "rice) 2 .rore

Irri-a*ion

!nnua"

2.

#00 mi""ion uni*s o$ e"e.*ri.i*y wi"" be -enera*ed $or domes*i. use. The e"e.*ri.i*y *ari$$ wi"" be .har-ed a* T5. # per uni*. ?!ddi*iona" In$orma*ionA The .onsumers are wi""in- *o pay T5. #. $or per uni* o$ e"e.*ri.i*y@.
0ene it Type 2"e.*ri.i*y Nature !nnua" "rivate 3ngle (,ar4et price) #0 .rore Social 3ngle (S!adow "rice) # .rore

D.

F"ood dama-es .an be sa0ed by T5. 2 .rore annua""y. Bowe0er4 *he Go0ernmen* wi"" no* ab"e *o .o""e.* any*hin- $or *his.
0ene it Type F"ood Re"ie$ Nature !nnua" "rivate 3ngle (,ar4et price) Social 3ngle (S!adow "rice) 2 .rore

Obtainin" %et benefit of the Pro ect An illustration (contd#) &ost * 0ene it o t!e "ro$ect (at a glance) +ne-S!ot cost:
&ost Type "rivate 3ngle (,ar4et price) Social 3ngle (S!adow "rice)

>ower 2quipmen* Cemen* =*her Ma*eria"s 'ns5i""ed Gabor ,5i""ed Gabor To*a"

D0 .rore #& 20 20

D#. .rore #H.2 # #6

9D Crore

&6.H Crore

&ost * 0ene it o t!e "ro$ect (at a glance) (contd.) 3nnual cost:

&ost Type "rivate 3ngle (,ar4et price) Social 3ngle (S!adow "rice)

=pera*in- Cos* To*a"

H. .rore H. Crore

6. .rore 6. Crore

3nnual 0ene it:

0ene it Type "rivate 3ngle (,ar4et price) Social 3ngle (S!adow "rice)

Irri-a*ion 2"e.*ri.i*y F"ood Re"ie$ To*a"

H. .rore #0 .rore #H. Crore

2 .rore # .rore 2 .rore 62 Crore

'eterminin" Pro ect Profitability from the Pri!ate An"le

( Ne* >resen* 0a"ue o$ a >ro1e.* is .a".u"a*ed asA
Bere4

$t J !nnua" )ene$i* a* *ime t & ,-.. crore Ct J !nnua" .os* a* *ime t & -.. crore % & :is.oun* Ra*e J #0N ?assumin-@ ' & Gi$e*ime o$ *he pro1e.* J 2 years I( & Ini*ia" .os* a* *he s*ar* o$ *he pro1e.* J 9D .rore

There$ore4

J O#0 ?>I!F.#0N4 2 @ 8 9DP J O#0 Q 9.0HH0 8 9DP J T5.? 2.2D@ .rore There$ore4 *he pro1e.* is -enera*in- a ne-a*i0e N>I o$ T5. 2.2D .rore $rom *he pri0a*e an-"e.

'eterminin" Pro ect Profitability from the Social An"le

Ne* >resen* 0a"ue o$ a >ro1e.* $rom ,o.ia" an-"e is .a".u"a*ed asA Bere4

There$ore4

$t J ,hadow pri.e o$ )ene$i* a* *ime t & /0 crore Ct J ,hadow pri.e o$ =pera*in- 23penses a* *ime t & 1.. crore % & ,o.ia" :is.oun* Ra*e J #0N ?assumin-@ ' & Gi$e*ime o$ *he pro1e.* J 2 years I( & Ini*ia" .os* a* *he s*ar* o$ *he pro1e.* J &6.H .rore

J OD . ?>I!F.#0N4 2 @ 8 &6.H P J OD . Q 9.0HH0 8 &6.H P J OD22.2D 8 &6.H P J T5. 2DH.6& .rore

From *he 0iew poin* o$ so.ie*y4 *he pro1e.* is -enera*in- a posi*i0e N>I o$ T5. 2DH.6& .rore.

$%&'O Approach (Contd#)

,*a-e 8 DA !d1us*men* $or *he impa.* o$ *he pro1e.* on ,a0in-s 7 In0es*men* The purposes o$ *his s*a-e are *o 8 de*ermine *he amoun* o$ in.ome -ained or "os* be.ause o$ *he pro1e.* by di$$eren* in.ome -roups ?su.h as pro1e.* o*her *han business4 -o0ernmen*4 wor5ers4 .us*omers e*..@ e0a"ua*e *he ne* impa.* o$ *hese -ains and "osses on sa0in-s measure *he ad1us*men* $a.*or $or sa0in-s and *hus *he ad1us*ed 0a"ues $or sa0in-s impa.*. ad1us* *he impa.* on sa0in-s *o *he ne* presen* 0a"ue .a".u"a*ed in s*a-e *wo.

$%&'O Approach ) Sta"e *hree (Contd#)

Measuremen* o$ Gain or GossA
! pro1e.* appoin*s #4000 "aborers a* a wa-e ra*e o$ T5. # 0 per day. These wor5ers were ready *o wor5 $or a dai"y wa-e o$ T5. #00. There$ore4 *he -ain o$ *he -roup o$ #4000 wor5ers $rom *he pro1e.* is O?# 0 - #00@ L #4000P J T5. 04000 per day. 20a"ua*ion o$ *he Ne* Impa.* on ,a0in-sA Ne* ,a0in-s Impa.* o$ a pro1e.* J Bere 4 2 3i & change in inco#e of group i as a result of the project MP"i & #arginal propensity to save of group i

$%&'O Approach ) Sta"e *hree (Contd#)

!ssumin- *ha* *he in.ome -ained or "os* by 6 -roup isA 4or5er 4!&'5. 06.(6(((6 Consu#er C! & '5. )-6((6((( Project P!&'5. ,(6((6(((6 78ternal "ector 7!&'5..6((6((( The mar-ina" propensi*y *o sa0e o$ *hese $our -roups isA MP"4 & (.(/6 MP"C& (.0.6 MP"P & (./ & MP"7 &(.9 There$ore4 *he ne* impa.* o$ *he pro1e.* on sa0in-s isA O24 04000L0.06M?-H4004000@L0.2 M#04004000L0.6 M 4004000L0.DP J #4004000 8 #4H 4000 M 64004000 M #4 04000 JT5. 64H 4000

$%&'O Approach ) Sta"e *hree (Contd#)

!d1us*men* Fa.*or $or ,a0in-s ?!Fs@A !Fs measures *he per.en*a-e by whi.h *he so.ia" 0a"ue o$ in0es*men* o$ one *a5a e3.eeds so.ia" 0a"ue o$ .onsump*ion one *a5a.

:ere6 MPC & Marginal Propensity to Consu#e MP" & Marginal Propensity to "aving MP Cap & Marginal Productivity of Capital C;I & Consu#ption ;ate of Interest social discount rate!

$%&'O Approach ) Sta"e *hree (Contd#)

!ssumin- *ha* M>C4 M>,4 M>.ap 7 CRI o$ an e.onomy is -i0enA M>C J H0N4 M>, J D0N4 M>.ap J 2 N and CRI J #0N There$ore4 ad1us*men* $a.*or $or sa0in- isA

!d1us*ed 0a"ue o$ *he impa.* o$ *he pro1e.* on sa0in-sA !d1us*ed 0a"ue o$ sa0in- J ?Ne* impa.* on sa0in-s L !Fs@ J T5. 64H 4000 L 6 J T5. 2&4 04000.

$%&'O Approach ) Sta"e *hree (Contd#)

( This T5. 2&4 04000 is now added *o *he ne* presen* 0a"ue o$ *he pro1e.* .a".u"a*ed in s*a-e -2 ? T5. 2DH.6& .rore@ ( There$ore4 *he ad1us*ed ne* presen* 0a"ue a* *his s*a-e wi"" be T5. ? 2DH.6& M .2& @ J T5.2DH.H6 .rore.

$%&'O Approach (Contd#)

,*a-e 8 6A !d1us*men* $or *he impa.* o$ *he pro1e.* on In.ome :is*ribu*ion Go0ernmen* .onsiders a pro1e.* as an in0es*men* $or *he redis*ribu*ion o$ in.ome in $a0or o$ e.onomi.a""y wea5ens se.*ions or e.onomi.a""y ba.5ward re-ions. This s*a-e pro0ides a 0a"ue on *he e$$e.*s o$ a pro1e.* on in.ome dis*ribu*ion be*ween ri.h 7 poor and amonre-ions. :is*ribu*ion !d1us*men* Fa.*or ?Eei-h*@ is .a".u"a*ed and *he impa.*s o$ *he pro1e.* on in.ome dis*ribu*ion ha0e been 0a"ued by mu"*ip"yin- *he ad1us*men* $a.*or wi*h *he par*i.u"ar in.ome o$ a -roup. This 0a"ue wi"" *hen be added *o *he ne* presen* 0a"ue re-.a".u"a*ed in s*a-e *hree *o produ.e *he so.ia" ne* presen* 0a"ue o$ *he pro1e.*.

$%&'O Approach ) Sta"e +our (Contd#)

:e*ermina*ion o$ Eei-h*sA I* *here are on"y *wo -roups in a so.ie*y4 poor and ri.h4 *he de*ermina*ion o$ wei-h* is 1us* an i*era*i0e pro.ess be*ween *he ana"ys*s ?a* *he bo**om@ and *he p"anners ?a* *he *op@. This is .a""ed Rbo**om-upS approa.h. Ehen more *han *wo -roups are in0o"0ed4 wei-h*s are .a".u"a*ed by *he e"as*i.i*y o$ mar-ina" u*i"i*y o$ in.ome. The mar-ina" u*i"i*y o$ in.ome is *he wei-h* a**a.hed *o an in.ome isA Ehere4 wi J wei-h* o$ in.ome a* .i "e0e" .i J "e0e" o$ in.ome o$ -roup i b J base "e0e" o$ in.ome *ha* has a wei-h* o$ #.00 n J e"as*i.i*y o$ *he mar-ina" u*i"i*y o$ in.ome

$%&'O Approach ) Sta"e +our (Contd#)

!ssumin- *ha* *he wor5er -roup -ains an in.ome o$ T5. 24 04000 $rom a pro1e.*4 *he base "e0e" o$ in.ome is T5. 04000 whi.h has a wei-h* i$ #.00 and e"as*i.i*y o$ mar-ina" u*i"i*y o$ in.ome is 0.20. There$ore4 wei-h* isA ,o4 0a"ue o$ *he impa.* o$ *he pro1e.* on in.ome dis*ribu*ion *o *his -roup isA ?T5. 24 04000 L 0.H2@ J T5. #4&04000. Now4 *his 0a"ue wi"" be added *o *he ne* presen* 0a"ue ad1us*ed in s*a-e *hree. There$ore4 !d1us*ed N>I in *his s*a-e wi"" be T5. ?2DH.H6 M 0.0#&@ J T5. 2DH.H& .rore

$%&'O Approach (Contd#)

,*a-e 8 A !d1us*men* $or Meri* and :emeri* Goods I$ *here is no di$$eren.e be*ween *he e.onomi. 0a"ue o$ inpu*s and ou*pu*s and *he so.ia" 0a"ue o$ *hose4 *he 'NI:= approa.h $or pro1e.* e0a"ua*ion ends a* s*a-e $our. In pra.*i.a"4 *here are some -oods ?meri* -oods@4 so.ia" 0a"ue o$ whi.h e3.eed *he e.onomi. 0a"ue ?e.-. oi"4 .rea*ion o$ emp"oymen* e*..@ and a"so *here are some -oods ?demeri*s -oods@4 so.ia" 0a"ue o$ whi.h is "ess *han *heir e.onomi. 0a"ue ?e.-.4 .i-are**e4 a".oho"4 hi-h--rade .osme*i.s e*..@ !d1us*men* *o *he ne* presen* 0a"ue o$ s*a-e 6 is required i$ *here is any di$$eren.e be*ween *he so.ia" and e.onomi. 0a"ue.

$%&'O Approach ) Sta"e +i!e (Contd#)

The s*eps o$ ad1us*men* pro.edure areA
2s*ima*in- *he presen* e.onomi. 0a"ue Ca".u"a*in- *he ad1us*men* $a.*or Mu"*ip"yin- *he e.onomi. 0a"ue by *he ad1us*men* $a.*or *o ob*ain *he ad1us*ed 0a"ue !ddin- or sub*ra.*in- *he ad1us*ed 0a"ue *o or $rom *he ne* presen* 0a"ue o$ *he pro1e.* as .a".u"a*ed in s*a-e $our.

$%&'O Approach ) Sta"e +i!e (Contd#)

!n a".oho" $a.*ory is under .ons*ru.*ion. The presen* e.onomi. 0a"ue o$ *he pro1e.* is T5. 2DH.H& .rore ?!d1us*ed N>I up *o s*a-e 6@. The ou*pu* o$ *he pro1e.* has no so.ia" 0a"ue *han i*s .os* o$ produ.*ion. Cos* o$ produ.*ion is *he 60 per.en* o$ *he e.onomi. pri.e. There$ore4 ad1us*men* $a.*or isA ,o4 *he ad1us*ed 0a"ue J ?T5. 2DH.H& .rore L - 0.60@ J - T5. 9 .## .rore There$ore4 *he ne* presen* 0a"ue o$ *he pro1e.* in *erms o$ so.ia""y a..ep*ab"e .onsump*ion is T5.?2DH.H&-9 .##@ J T4. 567.68 crore.

,-. Approach
I.M.:. Li**"e and %ames !. ,irr"ees ha0e de0e"oped an approa.h *o ,C)! whi.h is $amous"y 5nown as G-M approa.h. The .ore o$ *his approa.h is *ha* *he so.ia" .os* o$ usina resour.e in de0e"opin- .oun*ries di$$ers wide"y $rom *he pri.e paid $or i*. Ben.e4 i* requires Shadow Prices *o deno*e *he rea" 0a"ue o$ a resour.e *o so.ie*y. ?men*ioned ear"ier@

,-. Approach (Contd#)

Fea*ures o$ G-M !pproa.h ( G-M Numeraire is present unco##itted social inco#e. G-M me*hods op*s $or sa0in-s as *he yards*i.5 o$ *heir en*ire approa.h. >resen* sa0in-s is more 0a"uab"e *o *hem *han presen* .onsump*ion sin.e *he sa0in-s .an be .on0er*ed in*o in0es*men* $or $u*ure. G-M approa.h re1e.*s *he T.onsump*ion; numeraire o$ 'NI:= approa.h sin.e *he au*hors ?G 7 M@ $ee" *ha* *he .onsump*ion o$ a"" "e0e" is 0a"uab"e.

,-. Approach (Contd#)

Fea*ures o$ G-M !pproa.h ?Con*d.@ ( This approa.h measures *he .os* and bene$i*s in *erms o$ international or border prices. Ehy )order pri.es< )e.ause *he border pri.es represen* *he .orre.* so.ia" oppor*uni*y .os*s or bene$i*s o$ usin- or produ.in- a *raded -oods.

,-. Approach (Contd#)

,o.ia" Cos*-)ene$i* !na"ysis ?,C)!@ The resour.es 8 inpu*s 7 ou*pu*s 8 o$ a pro1e.* are ."assi$ied in*o main"yA Gabor Traded Goods Non-*raded Goods There$ore4 *o $ind ou* *he rea" 0a"ue o$ *hese resour.es4 we shou"d .a".u"a*e 8 a@ ,hadow wa-e ra*e ?,ER@ b@ ,hadow pri.e o$ Traded Goods .@ ,hadow pri.e o$ Non-*raded Goods

,-. Approach (Contd#)

a@ ,hadow Ea-e Ra*e ?,ER@ The purpose o$ .ompu*in- *he ,ER is *o de*ermine *he oppor*uni*y .os* o$ emp"oyin- an addi*iona" wor5er in *he pro1e.*. For *his we ha0e *o de*ermine 8

The 0a"ue o$ *he ou*pu* $ore-one due *o *he use o$ a uni* o$

"abor The .os* o$ addi*iona" .onsump*ion due *o *he *rans$er o$ "abor

,-. Approach (Contd#)

G-M su--es* *he $o""owin- $ormu"a $or .a".u"a*in- *he ,ERA ,ER J m M ?.-.@ M ?#-#/s@ ?.-m@ Bere4 m J mar-ina" produ.*i0i*y o$ *he wa-e earner .-. J .os* o$ urbaniza*ion ?#-#/s@ ?.-m@ J .os* o$ addi*iona" .ommi**ed .onsump*ion
.J addi*iona" resour.es de0o*ed *o .onsump*ion . J .onsump*ion o$ wa-e earner # J 0a"ue o$ un.ommi**ed resour.es #/s J 0a"ue o$ .ommi**ed resour.es .-m J addi*iona" .onsump*ion o$ "abor . ?*ranspor*a*ion sys*em4 e.-. road .ons*ru.*ion4 mo*or 0ehi."es@ 8 . ?e.-. bus ren*@ J .os* o$ urbaniza*ion ?e.-. road .ons*ru.*ion@

,-. Approach (Contd#)

b@ ,hadow pri.e o$ Traded Goods ,hadow pri.e o$ *raded -oods is simp"y i*s border or in*erna*iona" pri.e. I$ a -ood is e3por*ed4 i*s shadow pri.e is i*s F=) pri.eC I$ a -ood is impor*ed4 i*s shadow pri.e is i*s CIF pri.e. .@ ,hadow pri.e o$ Non-*raded Goods Non-*raded -oods are *hose whi.h do no* en*er in*o in*erna*iona" *rade by *heir 0ery na*ure. ?e.-. "and4 bui"din-4 *ranspor*a*ion@ Ben.e4 no border pri.e is obser0ab"e $or *hem.

,-. Approach (Contd#)

Idea""y4 ,hadow pri.e o$ Non-*raded Good is de$ined in *erms o$ mar-ina" so.ia" .os* ?M,C@ and mar-ina" so.ia" bene$i* ?M,)@. G-M su--es* *ha* *he mone*ary .os* o$ non-*raded -oods be bro5en down in*o 8 Gabor Tradab"e ,ER ?,o.ia" Ea-e Ra*e@ ,o.ia" Con0ersion Fa.*or ?,CF@ ,CF

Residua" .omponen*s

,-. Approach (Contd#)

!..oun*in- Ra*e o$ Re*urn ?!RR@A This is *he ra*e used $or dis.oun*in- so.ia" pro$i*s. 23perien.e is *he bes* -uide *o *he .hoi.e o$ !RR. !RR shou"d be su.h *ha* a"" mu*ua""y .ompa*ib"e pro1e.*s wi*h posi*i0e presen* so.ia" 0a"ue .an be under*a5en.

! Compara*i0e I""us*ra*ion o$ 'NI:= 7 G-M !pproa.h &+STS: #. >ower equipmen* .os*in- T5. D00 mi""ion. This equipmen* .an be e3por*ed a* K6. mi""ion. The shadow pri.e o$ per do""ar is T5. H0.
&ost Type >ower 2quipmen* Nature =ne-,ho* 9N#1+ 3pproac! T5. D# mi""ion L-, 3pproac! K 6. mi""ion

A Comparati!e &llustration of $%&'O & ,-. Approach (contd#)

2. D04000 *ones o$ .emen* produ.ed indi-enous"y are used in *he pro1e.* a* a .os* o$ T5. 64000. =ne-*hird o$ *he .emen* wi"" .ome $rom addi*iona" domes*i. produ.*ion whi.h .os* T5. 4000 per *one and Two-*hird wi"" .ome $rom di0ersion $rom o*her .onsumers who are wi""in- *o pay T5.64 00 $or per *on. The shadow pri.e o$ per do""ar is T5. H0.
&ost Type Cemen* Nature =ne-,ho* 9N#1+ 3pproac! T5. #&0 mi""ion L-, 3pproac! K #.6& mi""ion

A Comparati!e &llustration of $%&'O & ,-. Approach (contd#) D. =*her .ons*ru.*ion ma*eria"s ? sand4 bri.5s4 s*ee" e*..@ .os* 200 mi""ion. These ma*eria"s .omes $rom addi*iona" produ.*ion4 produ.*ion .os* o$ whi.h is # 0 mi""ion.
&ost Type =*her Ma*eria"s Nature =ne-,ho* 9N#1+ 3pproac! T5. # 0 mi""ion L-, 3pproac! K 2.#6 mi""ion

6. Two mi""ion man days o$ uns5i""ed "abor $or whi.h *he pro1e.* .ommi**ee de.ided *o pay a dai"y wa-e o$ T5. #00. The shadow pri.e o$ uns5i""ed "abor is &0 T5. >er day.
&ost Type 'ns5i""ed Gabor Nature =ne-,ho* 9N#1+ 3pproac! T5. #60 mi""ion L-, 3pproac! K 2.29 mi""ion

A Comparati!e &llustration of $%&'O & ,-. Approach (contd#) . ,5i""ed "abor .os*in- T5. o mi""ion. Bowe0er4 *his .os* re$"e.*s wha* o*hers are wi""in- *o pay $or *he s5i""ed "abor.
&ost Type ,5i""ed Gabor Nature =ne-,ho* 9N#1+ 3pproac! T5. 0 mi""ion L-, 3pproac! K 0.H# mi""ion

6. =pera*in- 7 Main*enan.e .os* o$ *he pro1e.* wi"" be T5.

H mi""ion annua""y. Bowe0er4 *he opera*in- .os* shou"d be T5. 6 mi""ion $rom so.ia" 0iew poin*.
&ost Type =pera*in- Cos* Nature !nnua" 9N#1+ 3pproac! T5. 6 mi""ion L-, 3pproac! K 0.9D mi""ion

A Comparati!e &llustration of $%&'O & ,-. Approach (contd#) 0ene its: #. 0. mi""ion a.res o$ "and wi"" be irri-a*ed. The Go0ernmen* wi"" .har-e *he wa*er "e0y a* T5. # 0 $or per a.re. The 0a"ue o$ addi*iona" ou*pu* per a.re due *o *he irri-a*ion wi"" be T5. 00 per a.re.

0ene it Type Irri-a*ion

Nature !nnua"

9N#1+ 3pproac! T5. 2 0 mi""ion

L-, 3pproac! K D. H mi""ion

2.

#00 mi""ion uni*s o$ e"e.*ri.i*y wi"" be -enera*ed $or domes*i. use. The e"e.*ri.i*y *ari$$ wi"" be .har-ed a* T5. # per uni*. The .onsumers are wi""in- *o pay T5. #. $or per uni* o$ e"e.*ri.i*y.
0ene it Type 2"e.*ri.i*y Nature !nnua" 9N#1+ 3pproac! T5. # 0 mi""ion L-, 3pproac! K 2.#6 mi""ion

D.

F"ood dama-es .an be sa0ed by T5. 20 mi""ion annua""y.

0ene it Type F"ood Re"ie$ Nature !nnua" 9N#1+ 3pproac! T5. 20 mi""ion L-, 3pproac! K 0.29 mi""ion

'issimilarities between *wo Approaches

'NI:= !pproa.h ( :omes*i. .urren.y is used as Numeraire ( Consump*ion is *he measuremen* base ( ,C)! ob1e.*i0es are me* *hrou-h s*a-e by s*a-e G-M !pproa.h ( In*erna*iona" >ri.e is used as Numeraire ( 'n.ommi**ed ,o.ia" In.ome is *he measuremen* base ( !* one p"a.e a"" ,C)! ob1e.*i0es are $u"$i""ed

Similarities between *wo Approaches

( Ca".u"a*ion o$ ,hadow >ri.es *o re$"e.* so.ia" 0a"ue ( 'sa-e o$ :is.oun*ed Cash F"ow Te.hniques ( Ta5in- in*o a..oun* abou* *he e$$e.* o$ a pro1e.* on sa0in-s4 in0es*men* and in.ome o$ a so.ie*y

/eferences
Chandra4 >rasanna4 Project< Planning6 Analysis6 =inancing6 I#ple#entation6 and ;eview6 6/e4 Ta*a M.Graw-Bi"" >ub"ishin- Co. Gimi*ed4 New :e"hi4 2006. Gi**"e4 I.M.:. 7 %. Mirr"ees4 Manua" o$ Indus*ria" >ro1e.* ana"ysis in de0e"opin- .oun*ries4 Io". II4 =2C:4 #96&. >u**aswamaiah4 U.4 7 Ienu4 ,.4 A 'heoretical and Applied Criti>ue of Alternative Methodologies. 'NI:=4 Guidelines =or Project 7valuation4 #9&#. www..i*e.h.o.ne*/1mba

0uestions
R,o.ia" .os* 8 bene$i*s are a"ways equi0a"en* *o mone*ary .os* 8 bene$i*sS. :o you a-ree< Ehy or why no*< 23p"ain. 2. Eha* do you mean by e3*erna"i*ies< Gi0e a* "eas* *hree e3amp"es o$ e3*erna"i*ies. Bow do you measure *hese e3*erna"i*ies< D. Bow a pro1e.* .an be e0a"ua*ed< 23p"ain brie$"y. 6. Eha* is shadow pri.in-< Is *here any di$$eren.e be*ween shadow pri.e and mar5e* pri.e< . :e$ine TNumeraire; and -i0e *he -enera" ideas abou* Numeraire. 6. :is*in-uish be*ween *radab"e and non-*radab"e -/s.
#.

0uestions
H. :e*ermine *he shadow pri.e o$ *he $o""owin-sA Tradab"e inpu*s 7 ou*pu*s Non-*radab"e inpu*s Non-*radab"e ou*pu*s Gabor Capi*a" &. )rie$"y e3p"ain abou* G-M approa.h. 9. Eha* are *he main $ea*ures o$ G-M approa.h *ha* di$$er $rom 'NI:= approa.h<

Than5 Vou
WWW For Vour Grea* >a*ien.e WWW

Possible Impacts
1. Taking labor away from other employments 2. Stimulating the production of new workers

Shadow Price of Labor

Willingness to pay of other users for this labor oThe value assigned by the worker on the leisure that he has forego. o The additional consumption of food; o The cost of transport and rehabilitation; o egative impact on savings and investments due to the increased consumption by workers; o the cost of training; o The marginal product in the previous employment; #lighting of foreign currency e$uivalent to the wages commanded by the foreign workers along with a premium on account of the foreign e%change.

!. "mporting workers