Socio-Economic Cost Benefit Analysis (CBA)

Socio-economic objectives are key requirements in many projects financed or supported by International Financial Institutions (IFIs) and EU Funds in particular.

Starting from the quantitative framework provided by financial analyses, socio-economic CBAs comprise several steps in order to adapt for the impact of a project on the various stakeholders concerned. These phases include

• Fiscal corrections, whereby the project's inputs and outputs are modified for transfers with public finance
• Corrections for externalities, which consider cost and benefits resulting from the project but having their effect to outside parties
• Determination of conversion factors, whereby prices of inputs and outputs are adapted to their true macro-economic value
• Creation of work places on short, interim and long term perspective

Ultimately an Economic Rate of Return (ERR) is calculated, which represents an indicator of the project's contribution to its socio-economic environment.

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The Socio-Economic Cost Benefit Analysis is a structured procedure applied by Manfred Watzal in past projects for EU institutions. The various methods are designed to quantify the social impact of a project with a view to enable its appraisal for the aim of a sustainable project performance.