Graduate School of The Environment
GSE806 Economic Evaluation Techniques
About this Unit
Next Offering: Semester 2, 2011 (Unit is offered in alternate years)
Offered: D2 - Day; Second Half-Year (Block mode delivery)
Convenor: Professor Dodo Thampapillai
Prerequisite: GSE810 OR Economics Degree
Credit Points: 4
The aim of this course is to introduce the course participants to the concepts and methods that are central to the economic appraisal of projects. Special attention will be given to public sector investments. The use of economics for project appraisal may appear to present a narrow focus. Nevertheless the scope is broadened here by drawing from the principles of Welfare Economics and Environmental and Social Economics. Attempts are also made to relate the economic appraisal techniques to legal and ethical considerations. The challenges surrounding the application of relevant concepts and methods will be illustrated by recourse to two case studies that relate to environmental and social policy. These case studies constitute a major part of the assessment for this course as indicated below. The focus this year will be on the evaluation of specific policy initiatives that emerge from the May 2011 Federal Budget. This evaluation will be guided and performed with explicit recognition being offered to two major global concerns, namely Climate Change and the Global Financial Crisis.
Teaching Staff
Convenor: Professor Dodo J Thampapillai
Phone: (02) 9850 7988
Email: dthampap@gse.mq.edu.au
Classes
Block Mode – Intensive: 23 – 24 September 2011 & 30 September - 01October 2011 combined web-based sessions through Blackboard
Unit web page
TBA
Technology Used and Required
Blackboard; Specific computer software including Power Point; Microsoft word; Excel and SPSS.
Learning Outcomes
Understanding current concepts and methods in economic evaluation techniques and the ability to apply them to the context of public policy/project appraisal.
Graduate Capabilities Developed
- Critical thinking;
- Data search, analysis and research ability;
- Case-study development;
- Report writing and Seminar presentation (graduate level)
Teaching and Learning Strategy
The program is based on on-campus sessions coupled with web-based teaching and learning. Candidates are expected to have reviewed specific prescribed readings prior to the commencement of the on-campus sessions. Interim issues/clarifications would be dealt with by recourse to web-based interactions and a set of discussion forums on Blackboard.
The sequence topics and the reading guide are as presented below.
Topics and Readings
Please note that the readings indicated below are intended only for providing an introductory treatment of the relevant topics. Additional and more advanced set of readings are listed in the supplementary readings under Required and Recommended Texts/Materials.
Topic 1: Nature and Scope of CBA: The issues of social choice and the ranking of alternatives.
Reading: Sinden and Thampapillai (1995) Chapter 1.
Topic 2: Welfare Economics Basis for CBA
Reading: Sinden and Thampapillai (1995) Chapters 2 and 3.
Topic 3: Identification of Benefits and Costs
Reading: Sinden and Thampapillai (1995) Chapter 4.
Topic 4: Valuation of Benefits and Costs - imperfect markets
Reading: Sinden and Thampapillai (1995) Chapter 5.
Topic 5: Valuation of Benefits and Costs - absent markets
Reading: Sinden and Thampapillai (1995) Chapter 6.
Topic 6: Timing of Benefits and Costs - Discounting and criteria
Reading: Sinden and Thampapillai (1995) Chapters 7-9.
Topic 7: Risk Analysis and Sensitivity Analysis.
Reading: Sinden and Thampapillai (1995) Chapter 10.
Topic 8: Multi-Criteria Analysis.
Tentative Schedule for First On-Campus Session
| 23/9/2011 | Topic |
|---|---|
| 09.00 - 09.30 |
Nature and scope of CBA |
| 09.30 - 10.30 | Welfare economics - Principles |
| 10.30 - 10.45 | BREAK |
| 10.45 - 12.00 | Identification of Benefits and Costs |
| 12.00 - 13.00 | Valuation of Benefits and Costs: Imperfect Markets |
| 13.00 - 14.00 | LUNCH |
| 14.00 - 15.30 | Valuation of Benefits and Costs: Absent Markets |
| 15.30 - 15.45 | BREAK |
| 15.45 - 17.00 | Timing Discounting and Criteria |
| 24/9/2011 | |
| 09.00 - 10.30 | Risk and Uncertainty |
| 10.30 - 10.45 |
BREAK |
| 10.45 - 12.00 | Major Case Study - Analysis |
| 12.00 - 13.00 |
LUNCH |
| 13.00 - 15.30 | Major Case Study - Analysis |
| 15.30 - 17.30 | Discussion on Minor Case Study |
Second On-Campus Session
The second session will be primarily devoted to the completion of the case studies and the analytic questions. The program for these two days will be finalized during the first on-campus session in consultation with the course participants.
Assessment Requirements
| Assessment | Marks | Due |
|---|---|---|
| Discussion Forum | 20% | |
| Analytic Questions | 30% | |
| Case Study | 50% |
The discussion forum deals with issues and ideas that would contribute to the development of a major case study. You will have to search the literature on current methods of Carbon-Capture-Storage and present these in succinct form
The Analytic Questions will be based on the material covered during the first on-campus sessions – The questions will be posted on Blackboard
The Major Case Study has two components. The first is its development. The basis for this development is the discussion forum. Each participant will then (with the assistance of the instructor) develop the case study. The second aspect of this is a report not exceeding 2000 words. The report will focus on how the case study project can be evaluated.
All 3 assessment requirements and minimum attendance must be completed for successful completion of the unit.
How Do I Request an Extension?
Contact the instructor preferably through mail on Blackboard. Alternatively e-mail dthampap@gse.mq.edu.au or phone (02) 9850 7988.
Examination Conditions
Not Applicable
Requirements to Complete this Unit Satisfactorily
Required and Recommended Texts/Materials
Main Text
Sinden, J.A. and Thampapillai, D.J. Introduction to Benefit Cost Analysis, Addisson-Wesley Longman, Melbourne 1995.
Supplementary Readings
Asian Development Bank, Guidelines for the Economic Analysis of Projects, 2008. (On-line edition: http://www.adb.org/Documents/Guidelines/Eco_Analysis/default.asp)
Dixon, J.A., Scura, L.A., Carpenter, R.A. and Sherman, P.B., Economic Analysis of Environmental Impacts, Earthscan Publications, Second Edition, London, 1994.
Frank, R, and Bernanke, B., Principles of Economics, McGraw Hill, 2008.
Thampapillai, D.J and Lim Boon Tiong, L. Shadow Prices for Outcomes in Distorted Markets, Mimeograph, LKY School of Public Policy, National University of Singapore, 2005.
Reading Guide
The aim of providing this guide is to facilitate preparation for the on-campus lecture/discussion sessions on 23-24 September 2011. As indicated above, the lectures will closely follow the main text.
This reading guide contains the following:
- A set of references to supplement the main text
- A suggested timetable for covering the key topics
- A case for the discussion forum
On the completion of first four topics, the discussion board will be open for the period leading up to the first on-campus session (as per the schedule given below). During this period:
- Course participants are encouraged to reflect and comment on the topic and post it to me for display on the discussion board.
- You could also comment on the contributions made by your fellow course participants.
The instructor will attempt to run this pretty much like a column in "letters to the editor". Participation in this discussion board is mandatory. At the beginning of the on-campus session, the instructor will attempt to compile the contributions and present an over-all review. This discussion forum will play an important role in the development of the major case study.
The on-campus sessions have time-slots that are dedicated for dealing with this and a further discussion topic.
Although some supplementary readings are given, you are encouraged to broaden your reading by consulting relevant databases; especially ECONLIT. The library at Macquarie University has ECONLIT and also some other useful databases such as ENVIRONMENT ABSTRACTS.
| Date | Topics | Chapters in Main Text |
Supp. Reading |
|---|---|---|---|
| 1-21 Aug 2011 | Nature and scope of CBA and Welfare Economics | 1-3 | Capsular view of CBA (On Blackboard) ADB Chapters 1-5 |
| 22-31 Aug 201 | Identification of Benefits and Costs | 4 | ADB Chapter 6 |
| 1-24 Sep 2011 |
Discussion Forum: For illustrative purposes consider a coal-based power generating station in regional NSW (For example Muswellbrook). Provide your thoughts on the following aspects:
|
||
| 1-12 Sep 2011 | Valuation of Benefits and Costs: Imperfect Market | 5 | Thampapillai, and LimBoon Tiong (2005) posted on Blackboard ADB Chapter 7 |
| 13-24 Sep 2011 | Valuation of Benefits and Costs: Absent Markets | 6 | Dixon et al. |
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