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BOX 7.3 Using a policy framework to analyze the benefits of Morocco’s Ouarzazate concentrated solar power project Through a public-private partnership, the World Bank is helping fi nance the fi rst phase of a 500 megawatt Ouarzazate solar power plant in Morocco. The project’s goal is to increase power generation from solar power, along with mitigating greenhouse gas emissions and the deleterious effects of power production on the local environment. The project illustrates the limits of a cost-benefit analysis when a project has nonmonetary objectives and is part of a broader national strategy. Both cost-effectiveness analysis and cost-benefit analysis indicate that the project is not economically justified under prevailing economic conditions. However, a simple listing of policy objectives and the project’s contributions to these goals can help identify cobenefits that would otherwise be ignored. • The project seeks to help develop a globally available noncarbon power generation technology and to reduce the cost of concentrated solar power worldwide (a global public goods benefit).

• It will contribute to Morocco’s energy and climate change objectives of security of supply, energy diversification, and reductions in CO 2 emissions, as well as other economic and social objectives, such as helping start a new green industry, developing interior regions of the country, and creating jobs. • It will test the use of storage technology in concentrated solar plants, create a precedent for the use of the public-private partnership business model to develop concentrated solar power plants in Morocco and elsewhere, and contribute to regional integration of the electricity market in the Mediterranean. These co-benefits can be identified using the six rubrics shown in table B7.3.1. The multicriteria analysis is thus useful for decision makers, even though it should not replace the cost-benefit analysis, which provides invaluable information.

TABLE B7.3.1 Co-benefits of the Ouarzazate concentrated solar power project Type of benefit

Channels

Examples of indicators

Environmental

Climate change mitigation

Reduced greenhouse gas emissions

Economic

Increase in factors of production (physical capital, human capital, and natural capital)

Added electricity production capacity

Accelerated innovation, through correction of market failures in knowledge

Demonstrate technology that has market potential in region, given likely latent competitive advantage and capacity to export solar resources to Europe

Local learning on solar technologies

Institutional innovation through the development of PPP Reduce cost of concentrated solar power globally

Social

Enhanced efficiency, through correction of nonenvironmental market failures

None

Increased resilience to natural disasters, commodity price volatility, and economic crises

Diversifying energy in Morocco

Job creation and poverty reduction

Creating jobs and new industries Spurring economic activity in interior regions of the country

Source: Based on the “Ouarzazate Concentrated Solar Power Project for Morocco” Project Appraisal Document.

to de c i sion m a ker s . For i n st a nc e , a cost-benefit analysis will provide different answers if different aggregation methods are used (how to aggregate losers and winners) or if different valuation methods are used (how to measure ecosystem losses in monetary terms).

Uncertainty and the need for robust decision making Assessing the costs and benefits of a green growth strategy is extremely difficult, especially when the future is difficult to project or even describe using probabilities.4

Inclusive Green Growth  

As the global population heads toward 9 billion by 2050, decisions made today will lock countries into growth patterns that may or may not b...