BOX 3.7. AN UNEXPECTED OUTPUT The Chinese government provided additional in-cash cofinancing of US$1.8 million to the SCS project (see Box 3.2) to strengthen national inputs during the first two years of project execution. This new cofinancing, additional to that available at the time of work plan approval, was made available to the national Executing Agencies to improve the information base on which decisions regarding national and regional priorities were based. In Chinese, there is no word to distinguish sea grass from seaweed. The Chinese government had recognized sea grass beds as important to the endangered dugong, but had not recognized the importance of sea grass beds as nursery grounds for commercially important fish. Using the government cofinancing, the national focal point from the SCS Institute of Oceanology was able to develop a GIS database using satellite imagery and ground truthing of all sea grass beds along the entire coast of China bordering the SCS. These data were contributed to the regional GIS database and represent the first internationally available information on sea grass in Chinese territorial waters. One of the largest sea grass beds, 540 hectares, at Hepu in Guangxi province, has now been selected as a demonstration site.
the comments in Section 3.2 regarding interrupted project cycles, however. Projects are unlikely to be cost-effective if they are interrupted for months or even years between the PDF and fullscale project phases. The investments to create information resources, human capacity, and political momentum are easily lost in the gaps from one phase to another. Similarly, poorly designed projects are unlikely to be cost-effective ones. We shall present some examples of projects that have achieved high levels of leverage. Emergent mechanisms for creating investment opportunities will also be discussed.
compares with the alternative approach of permitting secondary treatment and compensating for the increased nutrient loads by rehabilitating wetland. The equation is not a simple one because operation and maintenance costs must be included in the case of the treatment plant (these are low for the wetland). On the other hand, the rehabilitation of the wetland has inevitable costs for displaced resource users, again partly compensated by the multiple benefits of nutrient removal and natural habitat regeneration. This example is very pertinent to the Black Sea/Danube Strategic Partnership. The initial investment projects were selected on an opportunistic basis, but provide a unique opportunity53 to conduct a thorough evaluation of cost-effectiveness of alternative approaches.
Analysis Currently there are no direct means for measuring the costeffectiveness of projects. This is partly due to the divergent visions of cost-effectiveness itself (for example, operational cost-effectiveness of project implementation, cost-effectiveness for achieving the transboundary environmental objectives52). The most promising approach is to compare the project with alternatives for achieving the same transboundary benefits. Most projects, however, present only a single means to this end (the GEF alternative) and compare it with the environmental cost of not intervening at all (the baseline). We feel that the study of alternatives is central to effective decision making and note that the analysis of various options is an important part of the SAP process.
It is felt that the current wide range of GEF initiatives and approaches should enable improvements in future cost-effectiveness. Such studies are being taken very seriously in the case of PEMSEA (see Box 3.6 for example) and the SCS54 projects, though the emphasis is one comparison of costs and benefits, rather than comparing the cost of viable alternatives to attain agreed on socially acceptable environmental goals. Regional and interregional guidance on these techniques would be very useful; environmental economics offers powerful tools, but these must be employed with a full understanding that non-tangible benefits (for example, biological diversity, cultural values) are also an important component in any decision-making process affecting the natural environment.
As an example, it is unclear how the cost of nutrient removal by tertiary sewage treatment for small towns in the Danube Basin
At a project management scale, the comparative study of alternatives would also provide useful insights. The management
52 This key question can be expressed another way: Do we measure against the outputs (the project) or the outcomes (the program) and over what time period? If a truly strategic approach is envisaged, cost-effectiveness can be measured only against outcomes. 53 It was unclear from our study whether this opportunity will be used. The study of alternatives was considered during the Black Sea/Danube stocktaking meeting in 2000. At that time, it was appreciated that insufficient data were available to set cost-effectiveness as a criterion for project approval. However, implementation of the projects should change this situation. 54 The SCS is one of the few projects to have a task team of environmental economists and to present studies of costs and benefits. One limitation of this approach is the choice of discount rate when making economic assessments (the balance between costs and benefits is rather sensitive to the discount rate chosen). This becomes less important when comparing costs of alternative means to achieve a given benefit, however.
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Program Study on International Waters