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Maximizing Benefits of Water Management: A Comprehensive Guide for Economic Assessment and Group Collaboration

This guide explores the assessment of benefits in a water management context, focusing on various measurable categories including crop production, health, and equity. It delves into economic analysis outputs such as cost-benefit ratio and internal rate of return, as well as sharing insights on conducting cost-effectiveness analysis. The guide prompts discussions on economic comparators, benefit inclusion criteria, and the importance of understanding impacts for decision-making. It also addresses methodologies for benefit valuation, validation, and impact assessment. Engage in group discussions to compare expected benefits with actual impacts.

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Maximizing Benefits of Water Management: A Comprehensive Guide for Economic Assessment and Group Collaboration

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  1. Benefit Assessment in MUS Guide for Groupwork and Discussion

  2. Benefit definition • Service level (point on water ladder) and not infrastructure or technology choice • Quantity • Quality • Access • Reliability • Status (JMP-defined coverage)

  3. Measurable categories Crop production Fish production Livestock Livelihoods, jobs created Health (disease) Nutrition Power generation Domestic & industry Overall purpose Environment, optimize water use (e.g. seasonal hydrology) Community resilience Sustainability (multiple meaning) Equity (gender, poor, marginalized people) Achieved through Improved policy and implementation (transparent intersectoral & multiple stakeholder coordination and participation) Benefit categories Benefit is scenario-dependent (D+ or I+ or Community MUS) Measured by social group, income level, type of user

  4. Outputs of CBA (economic analysis) • Cost-benefit ratio (CBR), Internal Rate of Return (IRR), Net Present Value (NPV), Payback Period • Financial versus non-financial versus economic • Household or broader societal • Cost-effectiveness analysis?? • Other relevant economic indicators • $ benefit per additional litre per capita per day • Additional income per family per year • Economies of scale (present or not?) • Process indicators, such as productivity • Financing: CBA helps define who pays • Share of water, share of benefit, share of cost

  5. For discussion • What type of economic analysis to conduct? • What is the comparator in economic analysis? • How will a better understanding of the benefits facilitate practical decision making? • Which benefits to include and measure? • Which benefits have the most traction with policy makers (e.g. National goals or MDGs)? • Design and survey tools required for the task (e.g. determine causality of effect) • Valuation methodologies • Validating the benefits • Compare actual impacts with ex ante

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