economic analysis of education projects beyond rate of return lyn squire decvp
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Economic Analysis of Education Projects
Beyond Rate of ReturnLyn Squire
DECVP
Beyond RATE OF RETURNTraditional question:
Beyond RATE OF RETURNTraditional question:WHAT IS PROJECT’S VALUE
TO ECONOMY?
Beyond RATE OF RETURNTraditional question:WHAT IS PROJECT’S VALUE
TO ECONOMY?
Current question:
Beyond RATE OF RETURNTraditional question:WHAT IS PROJECT’S VALUE
TO ECONOMY?
Current question:SHOULD PROJECT BE IN
PUBLIC SECTOR?
Rationale for public intervention
Rationale for public interventionMarket failure (externalities, public
goods)
Rationale for public interventionMarket failure (externalities, public
goods)Redistribution
If there is a rationale...Is the project the best instrument?What about a subsidy?Regulation?
Price
Quantity0
Market for EDUCATION
Marginal private cost
Price
Quantity0
Market for EDUCATION
Marginal private cost
Marginal private benefit
Price
Quantity0
Market for EDUCATION
Marginal private cost
Marginal private benefit
Price
Quantity0
P
Q
Market for EDUCATION
Marginal private cost
Marginal private benefit
Price
Quantity0
P
Q
Externalities
Marginal private cost
Marginal private benefit
Price
Quantity0
P
Q
Marginal social benefit
Externalities
Marginal private cost
Marginal private benefit
Price
Quantity0
P
Q
Marginal social benefit
Q*
Externalities
Marginal private cost
Marginal private benefit
Price
Quantity0
P
Q
Marginal social benefit
Q*
}Subsidy
Externalities
Marginal private cost
Marginal private benefit
Price
Quantity0
P
Q
Externalities
Marginal private cost
Marginal private benefit
Price
Quantity0
P
Q Q*
Externalities
Marginal private cost
Marginalprivate benefit
Price
Quantity0
P
Q Q*
Externalities
Fiscal Impact:CNCA Morocco
Subsidy, millions of dollars
1989
1990
1991
1992
Average0 60 120
Fiscal Impact:CNCA Morocco
Subsidy, millions of dollars
1989
1990
1991
1992
Average0 60 120
67
76
90
107
85
Fiscal Impact:CNCA Morocco
Subsidy, millions of dollars
20% of basic
education
1989
1990
1991
1992
Average0 60 120
67
76
90
107
85
Fiscal Impact:CNCA Morocco
Subsidy, millions of dollars
160% of preventive
health
1989
1990
1991
1992
Average0 60 120
67
76
90
107
85
20% of basic
education
Redistribution
RedistributionLeyte-Luzon Geothermal
Project
Net present value
($ millions)
-60
-30
0
30
RedistributionLeyte-Luzon Geothermal
Project
Net present value
($ millions)
-60
-30
0
30 29.7
RedistributionLeyte-Luzon Geothermal
Project80% cost recovery
Net present value
($ millions)
-60
-30
0
30 29.7
RedistributionLeyte-Luzon Geothermal
Project80% cost recovery
Marginal cost of public funds
Net present value
($ millions)
-60
-30
0
30
1.0 1.1 1.2 1.3 1.4
29.7
RedistributionLeyte-Luzon Geothermal
Project80% cost recovery
Marginal cost of public funds
Net present value
($ millions)
-60
-30
0
30
1.0 1.1 1.2 1.3 1.4
29.7
9.2
-11.3
-31.8
-52.3
Operational ConclusionsAt IEPS:What is rationale for public
intervention?What is best instrument for
intervention?
Operational Conclusions
What is the fiscal impact?Can we measure benefit?
At IEPS:What is rationale for public
intervention?What is best instrument for
intervention?At APPRAISAL
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