[...]... finding tools that could help answer those questions What Is the Objective of the Project? The first step in the economic analysis of a project is to define clearly its objective(s) A clear definition is essential for reducing the number of alternatives to consider and for selecting the tools of analysis and the performance indicators 4 Economic Analysis of Investment Operations: Analytical Tools and Practical. .. evaluation and the sources of divergence between financial and economic prices 1 2 Economic Analysis of Investment Operations: Analytical Tools and Practical Applications The Economic Setting A project cannot be divorced from the context in which it takes place The relationship of the project to the broader development objectives for the sector and for the country is an integral part of its economic justification... quantities demanded of the services provided by the project? Are these effects being properly taken into account in designing the project? What will be the effect of cost recovery on the distribution of 6 Economic Analysis of Investment Operations: Analytical Tools and Practical Applications benefits? Will the cost recovery arrangements contribute to the efficient use of the output from the project and of resources... algebra and geometry and assumes that the reader is familiar with the basic concepts of supply, demand, and elasticities 1 An Overview of Economic Analysis Economic analysis helps design and select projects that contribute to the welfare of a country Economic analysis is most useful when used early in the project cycle to identify poor projects and poor project components If used at the end of the... Institute courses on the analysis and evaluation of investment operations, and has been extensively used in draft form at Harvard, Queens, the University of California at Los Angeles, and other universities offering similar courses Vinod Thomas, Vice President World Bank Institute Acknowledgments This handbook is the product of a team effort Jock Anderson, Howard Barnum, John Dixon, and Jee-Peng Tan contributed... economic, and fiscal analysis, permitting analysts and decisionmakers to look at a project from the perspective of society and of the principal stakeholders, particularly the implementing agency and the fisc, thereby making economic evaluation of projects richer and more transparent Because the handbook is a practical guide to project evaluation, all the techniques presented in it have been tried and. .. for measuring the value of environmental externalities and integrating them into the economic analysis of projects One of the main differences between financial and economic analysis is the treatment of the project’s impact on the environment Financial analysis usually ignores the environmental impact of projects, unless it directly affects the project’s monetary flows Economic analysis, by contrast,... the subject of cost-effectiveness and shows how these tools can be applied to project analysis The tools of cost-benefit analysis are applicable only to projects whose benefits are measurable in monetary terms Nevertheless, the general techniques of economic analysis are useful even in cases where the benefits are not measurable in monetary terms The chapter shows how to use the analytical tools for... general principles and methodologies that are applicable across sectors, including quantitative risk analysis; provides both theory and practice about how to evaluate transportation, health, and education projects; and explains how to assess the environmental impact of projects It provides a fresh look at the tools of project analysis and explains how to apply quantitative analysis of costs and benefits... The handbook is divided into two parts: a main text and a technical appendix The main text provides a set of tools for economic and risk analysis of projects It discusses issues that commonly arise in the evaluation of projects in any sector and gives guidance on extending the financial analysis to allow decisionmakers to view projects from the perspective of various stakeholders The main audience of . Regional Human Development Unit. Library of Congress Cataloging-in-Publication Data Economic analysis of investment operations: analytical tools and practical applications/ Pedro [i.e. Pedro] Belli. 140 Gainers and Losers 141 Fiscal Impact 141 11. Risk and Sensitivity Analysis 143 Sensitivity Analysis 143 Switching Values 145 Selection of Variables and Depth of Analysis 146 Presentation of Sensitivity. consistent. Economic Analysis of Investment Operations presents general principles and methodologies that are applicable across sectors, including quantita- tive risk analysis; provides both theory and