Article A Cost–Benefit Analysis of Indigenous Soil and Water Conserv...

Stepwise cost benefit analysis for soil and water conservation

§ The cost-benefit analysis begins with a clear point of view of assessment. The individual stakeholder’s view point is quite different from society/economy view point. This affects the valuation of costs and benefits.

§ It is mandatory to define options in a way that enables the analyst to compare them fairly. The option may be to compare the envisaged activities with base case/scenario; else the envisaged activities may be compared with and without case/scenario. In Ex-ante analysis we compare the intervention with base case. In Concurrent and Ex-post analysis we have option of both base cases as well as without case. There we compare the envisaged activities with both the cases.

§ We, then, analyze incremental effects of costs and benefits with gathered data on costs and benefits. The costs and benefits are set out over time in a spreadsheet and incremental costs and benefits are worked out.

§ The cost and benefit data is then expressed in a valid standard unit of measurement. We usually express them in nominal rupees using undistorted prices and then convert it to constant rupees for accounting inflation

§ Once stream of costs and benefits are computed we run the deterministic models BCR, NPV and IRR considering single-value costs and benefits as certain, to compute the deterministic estimates

§ Finally, sensitivity analysis is conducted for different value of prices, production levels and other important parameters considered in the analysis. This examines the sensitivity of the deterministic estimates of net present value, benefit:cost ratio and internal rate of return to the parameters used in the analysis. The analysis helps in making decision about the financial/economic viability of the activities envisaged in the project

§ In case it is not feasible to quantify the benefits as in natural resource management, a qualitative assessment is done. Considering all of the quantitative, as well as the qualitative analysis of factors that cannot be expressed in rupees, a reasonable recommendation is made

You must follow the cost price per square meter and find this information at the municipal administration level if it is like my country.