Current Issues in Project Analysis for Development

Current Issues in Project Analysis for Development

Elgar original reference

Edited by John Weiss and David Potts

This major work brings together authors with experience of both academic and operational project work to focus on issues such as the shadow exchange rate, the shadow wage, the discount rate and assessment of poverty impact and risk, as well as problems relating to specific sectors covering environmental projects, transport, education and health. There are also general chapters on the experience of semi-input–output-based estimation of shadow prices and the relevance of shadow pricing techniques to the context of developed economies in the EU. An overview by the editors sets out the evolution of the literature and highlights current issues. The general conclusion is that project analysis techniques remain relevant, albeit within a very different development context to that in which they were originally envisaged to be applied.

Chapter 10: Project Appraisal in Health: Cost Effectiveness Approaches

John Weiss

Subjects: development studies, development economics, economics and finance, development economics


John Weiss INTRODUCTION: THE DIFFICULTY OF BENEFIT VALUATION Health is the classic case of a sector with ‘difficult to value’ benefits. Various attempts have been made to incorporate monetary values for benefits from health projects, but all suffer from some drawbacks. Private sector health projects are designed to meet commercial objectives, and their benefits to the private investor are clearly a revenue stream from patient fees. Nonetheless if they are to be assessed from a social perspective this will be inadequate as it is widely recognised that healthier individuals benefit not just themselves but the rest of society – for example through reductions in infectious disease, higher productivity and innovation. In terms of the public sector at the simplest level some health projects may aim to save costs for the health system overall, particularly in the context of restrictions on overall health budgets. Various reorganisations for example may aim to shift health delivery from hospitals to local clinics or community health workers, with a view to saving costs. In this case, provided the impact of the project implementing such a reorganisation is purely cost saving, this provides an appropriate measure of benefits. In practice, however, reorganisations rarely have zero health consequences and once these are allowed for, the benefit valuation question is introduced. In the development context early efforts at valuing health impacts from reduced illness focused on the change in productivity allowed by a longer period of working time with a healthier population (for example due to projects that reduced...

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