Abstract
This paper presents a methodology to integrate cost–benefit analysis and SAM-CGE-based impact evaluation. While the two types of analysis have developed in parallel and without a clear connection, there is growing consensus that the two approaches should be integrated for complex investment projects, since their economic evaluation cannot rely solely on the partial equilibrium assumptions of cost–benefit (CB) analysis. Unlike CB analysis, impact evaluation looks at the economy as a complete system of interdependent components (industries, households, investors, government, importers, exporters). By integrating project accounting into a SAM-CGE framework, the methodology developed presents several properties that make it fit to the purpose of providing a reliable assessment of project contribution to the economy.
Highlights
A social accounting matrix (SAM) is an analytical construct that brings together the material input output matrix originally conceived by Leontief, with a consistent framework of transactions across production sectors, factors of production and various classes of economic agents
4 Discussion In this paper, I have presented a methodology to integrate cost–benefit analysis in the impact evaluation performed on the basis of social accounting principles (SAM or SAM-based models)
The integration requires a recasting of the economic and/or financial data used in the discounted cash flow analysis in the format used in the SAM accounts and involves a simple reclassification of costs and revenues according to the statistical system used in the SAM (Eisner 1988)
Summary
A social accounting matrix (SAM) is an analytical construct that brings together the material input output matrix originally conceived by Leontief, with a consistent framework of transactions across production sectors, factors of production and various classes of economic agents. In the form that has become more popular and was developed first by Stone’s research team in Cambridge, the SAM is the basis of modern national accounting and records transactions across activities, production factors, and the main institutional agents that constitute a modern market economy, namely households, enterprises, government, the financial and the international trade sector. Each column of a SAM records payments from that account to each other account, while each row records receipts to a specific account from each other account, with total receipts being equal to total expenditures. For this reason, the columns reporting production activities outlays can be interpreted as production processes, whose costs, including factor payments, equal in aggregate the value of production.
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