Chapter 13: Writing the CBA Report

Question 1

Where the CBA fits in the decision-making process

Answer 1

• make recommendations, not decisions
• only one input into the decision-making process
• difficult when resources are scarce
• push towards a more efficient resource allocation
• consider not just net efficiency benefits but also distributional effects in referent group analysis

Question 2

Multi-step process

Answer 2

• specify the project and its alternatives
• identify referent group stakeholders and point of view
• brief discussion of cba methodology
• conduct base case followed by sensitivity analysis
• make recommendations

Question 3

What is the report’s objective?

Answer 3

Provide policy recommendations based on the CBA, focusing mainly on the Referent Group CBA results

Question 4

Who is the audience?

Answer 4

Bureaucrats (policy makers) so make the report short and precise

Question 5

Who do decision-makers represent?

Answer 5

Assume they represent their people, who are directly and indirectly affected by the projects

Question 6

Criteria for recommendation

Answer 6

• overall improvement (at least potential Pareto improvement for aggregate RG)
• distribution effects -> gains/losses for RG stakeholders acceptable? gain or “acceptable” loss for non-RG groups?

Question 7

General elements in a report

Answer 7

• description of the project wiht an explanation of its need/importance
• statement of the point of view; methodology; assumptions; scenarios
• description of the analysis (base case)
• description of the sensitivity and threshold analysis
• discussion of net benefits and distributional effects
• justification for the decision criteria used
• significant qualitative/non-monetary impacts identified but not quantified
• the final recommendation in a way that its implications and qualifications are easily understood by decision-makers -> present supporting evidence; justify decision
• biases, limitations and deficiencies of the analysis, including areas for future investigation

Question 8

Discussion of results: Questions to be answered

Answer 8

• should the project be accepted?
• if applicable, is the private firm or public entity likely to be interested in the project?
• will the project receive support from referent group stakeholders?
• potential opponents of the project?
• possible to deal with that? (redistribution)