8. Evaluating sets of measures 30 min Chapter 6 Ivan Nygaard Sara Trærup

How to evaluate a set of measures? Content Setting the ambition Principles of cost-benefit analysis Example of cost benefit analysis for improved seeds program Example of cost benefit analysis for roof top solar program

Assessing costs and benefits Ambition: Sets of measures should be constructed to fulfil precise goals – e.g.10 %, 25 %, or 50 % of potential users using the technology in 2025 Costs and benefits Measures should be assessed in terms of – Costs effectiveness (cost per MWh, cost per ton CO2, cost per ha, cost per ton of harvest, cost per ton of water) – Socio-economic costs and benefits – Others: resource use, environment, fiscal balance, employment, livelihood

Example: Improved maize in Malawi cultivated by 97 % of farmers occupying 54% of the land cultivated by small-scale farmers, and contributing 54% of the calorie intake on average Key barrier to transfer and diffusion High prizes of improved seeds compared to traditional seeds Limited acceptance of improved maize among rural households Economically feasible: – Increased yield: 110 USD/ha (1 tonne/ha) – Extra cost of seeds: 30 USD/ha – Fertilizer cost: 29 USD/ha – Net revenue 51 USD/ha Ambition to make drought resistant crops (maize) acceptable in local communities target 1.5 million households, 1.7 million ha in 10 years Technology (adaptation, agriculture): drought tolerant crops

Evaluating sets of measures, improved seeds Measures Subsidy to reduce cost of improved seeds to cost of traditional seeds (reduced over time) Introduction campaign Awareness campaign Program administration Benefit compared to baseline Higher production of maize per ha. Higher food security Reduced vulnerability Cost compared to baseline Cost per increased yield Measures to diffuse drought resistant seeds

Evaluating sets of measures, improved seeds Targeted and time bound subsidies Effect on uptake

Evaluating sets of measures, improved seeds Cost of measures Production impact Cost of measures: 21 USD/tonne increased productionMarket price for maize: 110 USD/tonne

Evaluating sets of measures, improved seeds Calculation details

Evaluating sets of measures, Roof top Subsidy per unit in declining over 5 years Establishment of a test centre Awareness campaign Training of technicians Program administration Benefit compared to baseline Employment benefit CO2 emission reduction Cost compared to baseline Per extra installation Cost of CO2 reduction Cost of employment Roof-top programme for schools and institutions

Evaluating sets of measures, Roof top Targeted and time bound subsidies Effect on uptake

Evaluating sets of measures Cost of measures

Evaluating sets of measures, Roof top Impact CO2 reduction Impact employment Cost of CO 2 reduction = 14 USD/tons CO 2 Employment benefits 8686 USD/workplace/year

Evaluating sets of measures, Roof top

General challenges Challenges: How to estimate the effect on uptake for a specific set of measures: - i.e. how to estimate the baseline scenario and the 'programme' scenario Uncertainty of scenarios will always be high Cost of a subsidy scheme may be higher than expected Subsidies may be ineffective if they raise the general price-level Freeriding problem increases over time Recommendations Subsidies need to be reliable, predictable, decreasing over time and with a clear exit strategy Subsidies are expensive and need always be linked with other measures

Evaluating sets of measures Summing up Setting the ambition Principles of cost-benefit analysis Example of cost benefit analysis for improved seeds program Example of cost benefit analysis for roof top solar program