Economic evaluation of projects

A lot of work has already been done during the past three decades to establish the techniques for the economic and social evaluation of projects. Most of this work was done in the past by the international lending agencies like the World Bank, Organisation for Economic Co-operation and Development (OECD), Overseas Development Administration (ODA) and various UN agencies. Handling detailed mechanics of economic and social evaluation requires a skilled economist. These are briefly explained below. An important issue, which project planners need to be aware of, is the existence of distortions and the general techniques of dealing with them. Four issues are important: transfer payments, border and shadow pricing, externalities and system linkages. Two other related issues are also important: integrated resource planning (this has been dealt with briefly in Chapter 1) and environmental and health issues. The environmental impact of the ESI (electricity supply industry) is significant. This is an externality that needs thorough evaluation and understanding and is dealt with separately in later chapters.