Economic evaluation of an agricultural sector investment program: A case study for Peru

Abstract

An evaluation of a sector-wide investment program differs in important respects from an evaluation of an individual project. First, the program as a whole is likely to have more than a marginal effect on production and trade levels and other variables, and so the returns to any one project depend on which other projects are included in the program. Therefore the evaluation of all projects in the program must be carried out jointly. Second in many cases Policy makers may judge alternative program designs according to a multiplicity of criteria, explicitly or implicity. Hence the project identification stage of work is more useful if it takes into account the multiple criteria. This paper reports an experience in constructing and applying a model for the design and evaluation of a sector-wide agricultural investment program. Emphasis is placed on the ways in which such a model may be used. In the course of the applications discussed here, policy makers' preference weights among alternative goals were elicited, but even without such information a model-based exercise can be helpful in the design of a sector investment program.