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Planning for Development

Environment and Economics in Project Preparation

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From the Asian Development Bank

On-line edition: Free of Charge
Hardcopy price: $15.00

ISBN: 971-561-201-6

Paperback (Pub. Date: 1999)
In stock

A key feature of this book is the inclusion of ten cases illustrating practical approaches to environmental economic analysis in situations where information and time are limited and entail a lot of resources. The book provides case-specific examples of bringing environmental concerns to focus, thus providing guidance based on real world examples for project designers and evaluation experts on how to use environmental valuation for project design. From these examples, it can be concluded that the inclusion of environmental valuation in project design improves project quality. 1999. 394 pages.


Preface [ PDF: 10.8 kb | 4 pages ]

Acronyms [ PDF: 7.62 kb | 2 pages ]

Chapter 1: Introduction [ PDF: 21.6 kb | 7 pages ]

The attainment of sustainable economic development requires due consideration of how human actions affect environmental and natural resources, upon which we depend for material and cultural existence. The conscious alteration of bio-physical surroundings through investment projects carries with it the implicit obligation that the present generation’s welfare be maximized. It is also necessary that investment projects, programs, and policies be formulated such that current activities do not jeopardize the possible well-being of future generations. In that sense, the augmentation of a nation’s rate of economic growth through explicit projects, or through growth-oriented policies, must be carefully crafted so that the long-run social benefits are greater than the long-run social costs. It is this recognition of the need for a broad evaluation of projects and policies that has driven the interest in the environmental evaluation of various development-assistance activities (see Appendix 1).
Traditionally, cost-benefit analysis of projects gave little attention to many environmental implications of development projects. As a result, the economic internal rate of return (EIRR) represented an incomplete picture of the true environmental and consequently, economic implications of such projects...

  1. The Book and its Objectives
  2. Methods, Applications, and Target Audience
  3. Organization

Chapter 2: Economic Evaluation of Environmental Impacts [ PDF: 101 kb | 38 pages ]

  1. General Issues
  2. Nonmarket Goods and Services
  3. The Valuation Problem
  4. Valuation Methods

Chapter 3: Challenges in Economic Evaluation of Environmental Impacts [ PDF: 57.6 kb | 22 pages ]

  1. Evaluation Issues
  2. The Environment and Human Values

It is now recognized that the economic evaluation of environmental impacts is limited by ethical and moral considerations. This can be seen in controversial efforts to assign monetary values to human life and health status. The previous discussion of discounting the welfare of future persons is another example of the ethical content of economic analysis. While methods have been devised to evaluate project outcomes that will adversely affect human health (the value of lost earnings, the necessary increase in health costs to the individual), it is more difficult to address the question of the economic value of a human life. Noteworthy here are the complications arising from the moral dimension of choice, and the important role of perceptions of individual and group entitlements to certain situations and outcomes.

Chapter 4: Case Studies [ PDF: 31.2 kb | 12 pages ]

  1. The Role of Economic Evaluation
  2. Steps in Economic Evaluation of Environmental Impacts
  3. The Case Studies
  4. Agriculture and Natural Resources

  5. Water Resources

  6. Infrastructure, Energy, and Industry

Chapter 5: Promoting Environmental Improvements through Projects [ PDF: 75.2 kb | 28 pages ]

  1. Three Possible Scenarios
  2. Sectoral Examples
  3. Environmental Improvement Projects

Chapter 6: Conclusions [ PDF: 23.3 kb | 9 pages ]

In the initial chapters, economic evaluation of environmental impacts was said to be essential to improved project analysis on several counts. First, economic evaluation of environmental impacts would allow a more complete accounting of the many project impacts that had traditionally been considered less important or regarded as mere “externalities.” Second, it was suggested that environmental improvement is a part of the overall enhancement of human well-being and therefore both positive and negative environmental impacts must be recognized and not treated as mere “side issues.” Effort must be expended to assign monetary values, and incorporate these values into economic analysis. Third, progress in environmental economics means that economists are now able to draw on methods so that those impacts previously regarded as incidental might be fully incorporated into cost-benefit analysis. As an induced benefit of the development of environmental economics, it is now possible for projects to be reformulated and redesigned in response to new knowledge of the environmental implications of projects. Finally, advancements in environmental economics provide ways and means to design and analyze environmental policies, which maximize a project’s utility.

Appendices

  1. Environmental Protection and the Asian Development Bank [ PDF: 28.3 kb | 10 pages ]

  2. Global Systems Impact [ PDF: 35.4 kb | 13 pages ]

  3. SEIA for Indonesia: Central Sulawesi Integrated Area Development and Conservation Project [ PDF: 71.9 kb | 33 pages ]

  4. SIEE for Pakistan: Korangi Wastewater Management Project [ PDF: 26.8 kb | 11 pages ]

  5. SEIA for Bangladesh: Jamuna Bridge Railway Link Project [ PDF: 77.1 kb | 35 pages ]

  6. SEIA for People�s Republic of China: Yunnan Dachaoshan Power Transmission Project [ PDF: 56.1 kb | 25 pages ]

  7. Environmental Stressors Glossary [ PDF: 13.2 kb | 4 pages ]

Figures

  1. Components of Total Economic Value of Environmental and Natural Resources [ PDF: 10.5 kb | 1 page ]

  2. Major Categories of Environmental Resources/Goods and Services from Wildlife and Forest [ PDF: 12.9 kb | 1 page ]


© Asian Development Bank 1999

All rights reserved

First published August 1999

This publication was prepared by Asian Development Bank staff. The findings, interpretations, and conclusions expressed in it do not necessarily represent the views of the Bank or those of its member governments. The Asian Development Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequences of their use.


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