Three different approaches are commonly used to address distributional effects in
a project analysis: qualitative consideration, weighting, or the establishment of
distributional constraints. In each of these approaches, the analyst’s main task is
simply to present the information to the decision maker. It is then up to the decisionmaker to determine how to use this information.
The simplest method of providing such information to decision-makers is to
estimate net benefits by income class, group or region as applicable. Similarly,
adverse impacts of the project and costs of financing must be examined to determine
on which groups these burdens will fall. All this information is provided to the
decision-maker, who can then evaluate the distributional implications of the project
and decide whether the project is acceptable on distributional grounds.
Another alternative is to take the distributional analysis a step further and to
assign weights to the benefits received and costs borne by various groups or income
classes. Normally, benefits received, or costs borne, by disadvantaged groups are
given relatively more weight than those which accrue to wealthier groups. The
assignment of weights is clearly a subjective decision and is the job of the decision-maker, not the project analyst.
A third approach is to set constraints on the allowable distribution of benefits
among different groups. For example, targets can be established which set a minimum acceptable distribution of benefits to a designated low-income class or group.
Only those projects in which at least a certain percentage of benefits accrue to that
group will be given further consideration. Although the targets must be set by
decision-makers, analysts may be asked how to modify projects so that their
distributional aspects are improved.
8.10.2 Intergenerational Equity
In addition to affecting income distribution (which can be viewed as
intragenerational equity), development projects also affect the intergenerational
endowments of resources. The primary objective of “development” is to increase
the quality of life by increasing incomes, improving health and nutrition, or in some
manner making life easier for those affected by the project. However, the impacts of
many projects will be felt for long periods of time, and not all future impacts will be
positive.
Consider a development project which replaces a tropical rainforest with grazing
land for cattle. While it may be true that the tangible outputs of the rainforest are
relatively small compared to the value of the cattle, there are many factors to
consider. In many areas, cattle ranching will remain profitable only for a short period
- the limited fertility of many altered rainforest lands will support cattle for only a
few years before yields begin to decline. Often the end result is degraded, bare land
which will support very little in the future. In addition, the many unpriced benefits of
the rainforest are lost for ever.
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8 Analysis of Environmental Impacts of Infrastructure
a project analysis: qualitative consideration, weighting, or the establishment of
distributional constraints. In each of these approaches, the analyst’s main task is
simply to present the information to the decision maker. It is then up to the decisionmaker to determine how to use this information.
The simplest method of providing such information to decision-makers is to
estimate net benefits by income class, group or region as applicable. Similarly,
adverse impacts of the project and costs of financing must be examined to determine
on which groups these burdens will fall. All this information is provided to the
decision-maker, who can then evaluate the distributional implications of the project
and decide whether the project is acceptable on distributional grounds.
Another alternative is to take the distributional analysis a step further and to
assign weights to the benefits received and costs borne by various groups or income
classes. Normally, benefits received, or costs borne, by disadvantaged groups are
given relatively more weight than those which accrue to wealthier groups. The
assignment of weights is clearly a subjective decision and is the job of the decision-maker, not the project analyst.
A third approach is to set constraints on the allowable distribution of benefits
among different groups. For example, targets can be established which set a minimum acceptable distribution of benefits to a designated low-income class or group.
Only those projects in which at least a certain percentage of benefits accrue to that
group will be given further consideration. Although the targets must be set by
decision-makers, analysts may be asked how to modify projects so that their
distributional aspects are improved.
8.10.2 Intergenerational Equity
In addition to affecting income distribution (which can be viewed as
intragenerational equity), development projects also affect the intergenerational
endowments of resources. The primary objective of “development” is to increase
the quality of life by increasing incomes, improving health and nutrition, or in some
manner making life easier for those affected by the project. However, the impacts of
many projects will be felt for long periods of time, and not all future impacts will be
positive.
Consider a development project which replaces a tropical rainforest with grazing
land for cattle. While it may be true that the tangible outputs of the rainforest are
relatively small compared to the value of the cattle, there are many factors to
consider. In many areas, cattle ranching will remain profitable only for a short period
- the limited fertility of many altered rainforest lands will support cattle for only a
few years before yields begin to decline. Often the end result is degraded, bare land
which will support very little in the future. In addition, the many unpriced benefits of
the rainforest are lost for ever.
246
8 Analysis of Environmental Impacts of Infrastructure