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Ranking Environmental Projects

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  • Pannell, David J.

Abstract

Environmental agencies and utilities wishing to support environmental projects face the challenge of deciding which of the many possible projects they should support with their limited resources. Projects vary greatly in their benefits and costs, so selecting the best projects can make a major difference to the level of benefits that can be generated for a given budget. Key principles for ranking projects are presented and explained. Suitable formulas to use as a metrics for ranking projects are developed and explained. The formulas account for valuation of benefits, the effectiveness of management, time lags, behaviour change, various risks and various costs. The formulas are designed to strike a balance between theoretical rigour and reasonable simplifications. A number of common mistakes to avoid are outlined. Sample templates for project proposals and spreadsheets for ranking projects are provided, to make it easy to put the principles into practice.

Suggested Citation

  • Pannell, David J., 2015. "Ranking Environmental Projects," Working Papers 204305, University of Western Australia, School of Agricultural and Resource Economics.
    • Handle: RePEc:ags:uwauwp:204305
    DOI: 10.22004/ag.econ.204305
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    References listed on IDEAS

    as
    1. David J. Pannell, 1997. "Sensitivity analysis of normative economic models: theoretical framework and practical strategies," Agricultural Economics, International Association of Agricultural Economists, vol. 16(2), pages 139-152, May.
    2. Glenn Jenkins & Chun-Yan Kuo & Arnold C. Harberger, 2011. "Cost-Benefit Analysis for Investment Decisions: Chapter 4 (Discounting and Alternative Investment Criteria)," Development Discussion Papers 2011-04, JDI Executive Programs.
    3. Roberts, Anna M. & Pannell, David J. & Doole, Graeme & Vigiak, Olga, 2012. "Agricultural land management strategies to reduce phosphorus loads in the Gippsland Lakes, Australia," Agricultural Systems, Elsevier, vol. 106(1), pages 11-22.
    4. Pannell, David J. & Roberts, Anna M., 2010. "Australia’s National Action Plan for Salinity and Water Quality: a retrospective assessment," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 1-20.
    5. Pannell, David J. & Gibson, Fiona L., 2014. "Testing metrics to prioritise environmental projects," Working Papers 163211, University of Western Australia, School of Agricultural and Resource Economics.
    6. Stefan Hajkowicz & Andrew Higgins & Kristen Williams & Daniel P. Faith & Michael Burton, 2007. "Optimisation and the selection of conservation contracts," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(1), pages 39-56, March.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 259 – Increasing environmental benefits
      by David Pannell in Pannell Discussions on 2013-12-02 21:00:50
    2. 262 – Environmental triage
      by David Pannell in Pannell Discussions on 2014-03-17 20:00:04
    3. 263 – The EQ Index
      by David Pannell in Pannell Discussions on 2014-04-07 20:00:16
    4. 272 – Additionality
      by David Pannell in Pannell Discussions on 2014-09-29 20:00:44
    5. 279 – Garbage in, garbage out?
      by David Pannell in Pannell Discussions on 2015-03-11 20:00:26
    6. 325 – Ranking projects based on cost-effectiveness
      by David Pannell in Pannell Discussions on 2019-09-16 15:45:42

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    Cited by:

    1. Pannell, David J. & Gibson, Fiona L., 2014. "Testing metrics to prioritise environmental projects," Working Papers 163211, University of Western Australia, School of Agricultural and Resource Economics.
    2. Baker, Rick & Ruting, Brad, 2014. "Environmental Policy Analysis: A Guide to Non‑Market Valuation," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165810, Australian Agricultural and Resource Economics Society.
    3. Kompas, Tom & Chu, Long & Ha, Pham Van & Spring, Daniel, 2019. "Budgeting and portfolio allocation for biosecurity measures," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(3), July.
    4. Rolfe, John & Windle, Jill, 2016. "Estimating supply functions for agri-environmental schemes: Water quality and the Great Barrier Reef," 2016 Conference (60th), February 2-5, 2016, Canberra, Australia 235510, Australian Agricultural and Resource Economics Society.
    5. Rolfe, John & Whitten, Stuart & Windle, Jill, 2017. "The Australian experience in using tenders for conservation," Land Use Policy, Elsevier, vol. 63(C), pages 611-620.

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    Keywords

    Environmental Economics and Policy; Resource /Energy Economics and Policy;

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