Projected Economic Benefits. Cost-Benefit Analysis (“CBA”) is completed to determine whether project costs are justified by the estimated economic benefits that can be directly attributed to the Project. The underlying economic logic of the CBA model(s) follow(s) the project logic diagrams depicted above. Additionally, several of the variables included in the model become key Indicators to monitor the Project(s) and evaluate whether each Project achieved its objective as set forth in Section 1.2 of this Compact, as well as determining its cost effectiveness. Each model includes estimated benefits and the total estimated costs to reach those intended benefits, whether costs are incurred by MCC, Mozambique, another donor, or another entity. These are typically examined over a 20- year period, unless noted otherwise. The table below provides a summary of the estimated ERRs for the Projects. The text following the table describes the general methodology and logic of the CBA model(s), as well as the key benefit streams, costs, assumptions, risks, etc. for each of the calculated ERRs. Project/Activity Estimated Economic Rates of Return Overall Compact 14.7 Connectivity and Rural Transport Project 12.6 Activity 1: Licungo Bridge + Mocuba Bypass 10.7* Activity 2: Rural Roads 11.9† Activity 3: PIR – Maintenance and Access to Women and Youth 13.5 Promoting Reform and Investment in Agriculture Project 19.9 Activity 1: PREFIA 21.1 Activity 2: ZCAP 17.1 Coastal Livelihoods and Climate Resilience Project 17.7 * Calculated over a 40-year time horizon. † ERR and net present value estimates for the Rural Roads Activity are based on the aggregate net benefits from a large basket of potential investments that have been pre-screened for compliance with MCC investment criteria. Net benefits and net present value are scaled down based on the Multi-Year Financial Plan Summary in Annex II. Specific investments will be selected prior to entry-into-force of the Compact and the activity-level ERR estimate will be correspondingly updated.
Projected Economic Benefits. Cost-Benefit Analysis (CBA) is completed to determine the cost effectiveness of MCC investments. A threshold of 10% is typically used to inform investment decisions. The underlying economic logic of the CBA model(s) follow(s) the Project Logic depicted above. Additionally, several of the variables included in the model become key indicators to monitor the Program and evaluate whether the Program reached the intended outcomes, as well as determining its cost effectiveness. Each model includes estimated benefits and the total estimated costs to reach those intended benefits, whether costs are incurred by MCC, another donor, the Government, or another entity. These are typically examined over a 20-year period, unless otherwise noted. The table below provides a summary of the estimated ERRs across this Compact’s projects. The text following the table describes the general methodology and logic of the CBA model(s), as well as the key benefit streams, costs, assumptions, risks, etc. for each of the calculated ERRs. Project/Activity Estimated Economic Rates of Return Health Systems Strengthening 15% Market Driven Irrigated Horticulture 4% Business Environment and Technical Assistance 12% Total 8.9%
Projected Economic Benefits. The CBA model assumes the total estimated costs of the Project and its associated Activities, whether those costs are ultimately supported by the Compact or another source of funding, and the total estimated economic benefits they are expected to generate over a period of 30 years. The underlying economic logic of the CBA model follows the project logic described in Section
Projected Economic Benefits. A CBA is completed to determine the cost effectiveness of MCC investments. A threshold of 10 percent is typically used to inform investment decisions. The underlying economic logic of the CBA model(s) follow(s) the project logic depicted above. Additionally, several of the variables included in the model become key indicators to monitor the Program and evaluate whether the Program reached the intended outcomes, as well as determining its cost effectiveness. Each model includes estimated benefits and the total estimated costs to reach those intended benefits, whether costs are incurred by MCC, another donor, the Government, or another entity. These are typically examined over a 20-year period, unless otherwise noted. Table 1 provides a summary of the estimated ERRs across this Compact’s Projects. The text following the table describes the general methodology and logic of the CBA model(s), as well as the key benefit streams, costs, assumptions, risks, etc. for each of the calculated ERRs. Table 1: Estimated Economic Rates of Return and Beneficiary Counts Compact Component Economic Rate of Return (mean ERR) Project Cost Probability that ERR is greater than 10% Beneficiaries (People) Compact N/A N/A 5,394,000 AGC Project 8.0-10.0%32F $244.95 N/A 1,179,000 million Increased Land Productivity Project 12.8% $44.11 million 73% 4,215,000 ACFD Project N/A $8.50 million N/A N/A AGC Project Benefit Streams The AGC Project is expected to produce a series of benefit streams for both existing and new road users, which include various forms of motorized traffic (vehicle operators and passengers) but also non-motorized traffic such as bicyclists and pedestrians using the rehabilitated corridors. The main benefit streams are vehicle operating cost and value of time savings, which are calculated for existing traffic as well as generated and diverted traffic. Vehicle operating cost savings benefits accrue to users of an improved road. As a road is improved, average speeds on the road increase because roughness of the road decreases, leading to lower fuel costs per trip and less damage to tires, suspension, etc. The Roads Economic Decision model used to estimate road user benefits that are inputs to the CBA model uses vehicle fleet data, traffic per day information, and road quality before and after the road improvements (measured by the International Roughness Index) to assess how improvements impact vehicle damage per trip. Value of time savings, like vehicle operating cost ...
Projected Economic Benefits. The Large-Scale Irrigated Agriculture Project is estimated to increase farmer incomes through increased production along extensive and intensive margins. The Konni irrigation system rehabilitation and accompanying measures are expected to increase both area cultivated, particularly during the dry season, and output per hectare. Farmers are expected to augment their incomes primarily by increasing the volume of their production through both enlarging their area cultivated and through improved yields. The new irrigation perimeters in the Dosso-Gaya area are also expected to contribute to economic growth and poverty reduction by raising farmers’ income. As with Konni, farmers are expected to increase their income by boosting their production through both an increase in area cultivated and improvement in yields. The project will make more land available for production through both an increase in area cultivated, but also through projected land and production savings from the reduction in flood losses. The economic rate of returns (ERR) for the three irrigation perimeters are given in Table 4 below, and the combined ERR for irrigation perimeters at Compact signing was 10 percent. The key assumptions underlying the cost-benefit analyses and the associated risks to project success are common to all three irrigation perimeters. The first area of substantial uncertainty has to do with the cost of and timeline for physical construction. Changes in cost will obviously have a direct impact on ERRs, but timeline issues are important as well; the cost- benefit analyses currently assume that yield improvements will occur via farmer training activities. To the extent that there is less time to train farmers who can cultivate on their own plots using the improved irrigation technology, the ERR will decrease. Similarly, farmer training take-up will also directly affect the cost-benefit analyses. Roads infrastructure serving the Dosso-Gaya perimeters is a complementary investment to the irrigation. Rehabilitating and upgrading the road network around the Dosso-Gaya area is expected to improve physical market access. With targeted improvements on the road network, the Dosso-Gaya perimeters can be linked to the rest of the country. However, because of the size of the investment, the ERR for roads are calculated separately. To this end, the HDM-4 model was used to calculate the ERRs for different segment of roads to be rehabilitated. The main assumption in the HDM-4 model is ...
Projected Economic Benefits. A cost-benefit analysis (CBA) is completed to determine the cost effectiveness of MCC investments. A threshold of 10 percent is typically used to inform investment decisions. The underlying economic logic of the CBA model(s) follow(s) the project logic depicted above. Additionally, several of the variables included in the model become key indicators to monitor the Program and evaluate whether the Program reached the intended outcomes, as well as determining its cost effectiveness. Each model includes estimated benefits and the total estimated costs to reach those intended benefits, whether costs are incurred by MCC, another donor, the Government, or another entity. These are typically examined over a 20-year period, unless otherwise noted. The table below provides a summary of the estimated ERRs across this Compact’s Projects. The text following the table describes the general methodology and logic of the CBA model(s), as well as the key benefit streams, costs, assumptions, risks, etc. for each of the calculated ERRs. Table 1: Estimated Economic Rates of Return Project/Activity Estimated ERR Energy Storage Project 6-12%, with original estimate of 9% Frequency Restoration Response Activity To be determined MFES Activity To be determined Energy and Climate Policy Support Activity Not evaluated: Costs are assumed necessary for sustainability of the Frequency Restoration Response and MFES Activities, and carried in the Project-level ERR. JETA Project To be determined7 Energy Storage Project Benefit Streams Most benefit streams stemming from the proposed energy storage systems relate to avoided costs. The category most directly connected to the core project logic is avoided costs of Kosovo importing or inefficiently securing automatic and manual frequency restoration reserves. Both reserve categories (automated frequency restoration reserves and manual frequency restoration reserves) have a reserve capacity cost (associated with guaranteeing the reserves are available, if necessary) and a separate cost associated with “activation” (when the reserves are called upon and energy is delivered). Additionally, the MFES Activity assumes benefits from Energy Arbitrage, wherein energy produced at times of low value is stored and released at times of higher value. Lastly, in a counterfactual in which Kosovo does not have energy storage systems, even though some reserves are procured more expensively (the avoided costs), energy systems modeling indicates that Kosovo will ...
Projected Economic Benefits. Cost-Benefit Analysis (“CBA”) is completed to determine whether project costs are justified by the estimated economic benefits that can be directly attributed to the Project. The underlying economic logic of the CBA model(s) follow(s) the project logic diagrams depicted above. Additionally, several of the variables included in the model become key Indicators to monitor the Project(s) and evaluate whether each Project achieved its objective as set forth in Section 1.2 of this Compact, as well as determining its cost effectiveness. Each model includes estimated benefits and the total estimated costs to reach those intended benefits, whether costs are incurred by MCC, the Government, another donor, or another entity. These are typically examined over a 20-year period, unless noted otherwise. The table below provides a summary of the estimated ERRs for the Projects. The text following the table describes the general methodology and logic of the CBA model(s), as well as the key benefit streams, costs, assumptions, risks, etc. for each of the calculated ERRs. Project/Activity Estimated Economic Rate of Return ATLAS Project 10.03% ATLAS Project/Transport Planning Reform, PIMG, and PPDF Activities 15.38% ATLAS Project/Good Practice Infrastructure Projects Activity 5.56%12 FMD Project Unknown, pending specific details on proposed investment projects and blended finance transactions proposed to be supported by the Compact. This ERR needs to be calculated prior to entry into force. PIR (defined below) activities do not have estimated ERRs due to long-term nature when benefits are expected. Beneficiaries also need to be more specifically identified for CBA to be carried out. MSME Finance Project 16.52% Economic Modeling of the ATLAS Project The ATLAS Project’s ERR depends on the pair of ERRs associated with two sets of sub-Project- level ERRs. There is one CBA associated with the policy and institutional reform (“PIR”) 12 See explanation in the fifth paragraph following the table. Activities, namely the Transport Planning Reform, PIMG, and PPDF Activities, and there is another CBA associated with the Good Practice Infrastructure Projects Activity (which is in turn an aggregation of Sub-activity-level CBAs corresponding to four potential Proper). The ATLAS PIR CBA models improved efficiency of subnational transport infrastructure investments as well as a greater quantity of said investment. More specifically, the Activities in question are modeled as resulting in the i...
Projected Economic Benefits. The economic analysis for the Projects is summarized in the following table and summarized for each Project below. Project Estimated ERRs Strengthening Electricity Sector Effectiveness Project (Project 1) 11% Cost Effective and Reliable Electricity Supply Project (Project 2) 16% Grid Development and Access Project (Project 3) 23% The benefit streams of Project 1 comes from four sources, including: (i) reduction in cost of service; (ii) increase supply as the system creates the necessary environment for IPPs to enter the market and for increased imports of lower cost electricity; (iii) increased electrification due to higher investment (both public and private); and, (iv) reduction in subsidy needs, since cheaper imports and solar-based IPPs reduce the cost of service and therefore reduce the need for government subsidies. To do use, MCC and the Government used the technical-financial model as part of the Roadmap analysis and estimate the differences across the four benefit streams between what the model assumes as the base case scenario and the scenario that reflects the changes that MCC and the Government anticipate as results from the reforms and interventions the Government agreed to pursue per the Roadmap. To estimate the project ERR, MCC and the Government compared the consumer surplus of the base case scenario to the consumer surplus of the scenario chosen by the Government. To estimate the consumer surplus, the following formula was used: it = ( – CRTit)*GWhit – it – it where CS stands for consumer surplus, WTP is the willingness to pay (as captured by the willingness to pay survey conducted during Program development in both Ouagadougou and Xxxx-Dioulasso), CRT is the cost reflective tariff, as measured in the technical-financial model, and ℎ is the additional supply, also as measured in the model. The consumer surplus is not generated in a vacuum, but is an outcome of investments, and the model gives us estimates of both the investment and subsidy costs associated with various policy reform scenario. Specifically, the model defines as the investment required to meet the expected demand, and is the subsidy requirement to ensure the utility financial viability. Finally, the subscripts stands for the scenario (base case versus with reform) and stands for the year as the analysis covers the impact of the reform for the next 15 years, 2020 - 2035. The CBA model consisted of taking the difference between consumer surplus before and after the implementat...
