Opening statement to the PACC Cost Benefit Analysis Workshop

Opening statement to the PACC Cost Benefit Analysis Workshop from David Sheppard, Director-General of the Secretariat of the Pacific Regional Environment Programme (SPREP)

6 February 2012

Mr Chairpacc_cba_feb2012
Deputy Resident Representative of UNDP
Workshop participants
Ladies and gentlemen

Welcome to this workshop which is addressing the important topic of cost benefit analysis, with a particular focus on the Pacific Adaptation to Climate Change Project, the PACC Project.

I hope you have all had a good trip here and hope you enjoy your stay at SPREP.

Please take the time while you are here to walk around our compound - don't forget to take an umbrella - and meet and talk with some of the talented and professional staff at SPREP.

Delegates, SPREP is the region's environment agency and has been working in support of Pacific countries for over 35 years to better manage and protect our terrestrial and marine environments.

We have been undertaking an aggressive change management process over the last 2 years to make us better able to deliver useful services to Pacific countries.

This has involved a number of strategic shifts for our organisation. In particular, SPREP is shifting towards delivery of practical and relevant programmes in our member countries and territories.

Other strategic shifts are moving SPREP towards better and more focused partnerships, and the better application of science in our programme.

A key aim of our reform process is to strengthen partnerships with like-minded organisations both within this region and with other regions such as the Caribbean.

There is too much to do in our region and better partnerships are essential. SPREP's aim is to be a good partner with others so we can better serve the countries and peoples of the Pacific. We recognize that the scale of environmental and climate change challenges require a coordinated and cross sectoral approach.

On climate change, as for all other issues we work on, our aim to work in partnership with other regional agencies, in particular through the CROP CEOs Sub Committee on Climate Change, and the Working Arm of this Committee comprising technical officials.

It is also important to work and strengthen partnerships on climate change with Non Government Organisations (NGOs) in the Pacific region.

It is critical that regional agencies work together to better support national priorities on climate change and other issues.

There is no room for competition or duplication.

We are happy to see cooperation between regional agencies being put in action at this workshop with the involvement of Paula Holland from SPC/SOPAC and Marita Manley from GIZ.

Paula and Marita – welcome and thanks very much for coming and for sharing your expertise in economics, and many other areas, with everyone at this workshop.

Partnership is also what the PACC Project is about – with its joint venture approach between UNDP and SPREP in support of Pacific Island countries' work on climate change adaptation.

As we know climate change is the biggest challenge facing Pacific island Countries – this is recognized and has been clearly stated by Pacific leaders at many forums such as the Climate meeting in Durban last year and last years' Forum leaders meeting.

This underlines the importance of PACC as a model and as a pioneering project in this region and globally.

The PACC project is the biggest GEF – Global Environment Facility - funded adaptation project in the region and is also amongst the first adaptation projects globally to have on-the-ground implementation as its outcomes.

We are already receiving a lot of scrutiny from the GEF, multilateral and bilateral donors, and many others, to see how PACC have progressed with its implementation. We are very much "under the microscope".

This year PACC is moving squarely into the implementation phase. We are delighted that other partners are coming on board, including the Australian Government, which is supporting the so called PACC+ project, and also USAID, which will be supporting additional adaptation projects in Solomon Islands and Kiribati.

Moving into the implementation phase makes it essential that we improve our decision making, particularly on making choices between competing priorities and adaptation options.

The topic of making choices brings me logically to the topic of this workshop – cost benefit analysis.

My limited understanding is that cost benefit analysis is all about priorities and making more informed decisions.

But I wasn't 100% sure so I "googled" the topic of cost benefit analysis this morning and found more than 15 million entries. It's obviously a popular subject.

A Wikipedia definition is that cost benefit analysis is:
"a systematic process for calculating and comparing benefits and costs of a project, decision or government policy.

also, that CBA has two purposes:

  1. To determine if a project is a sound investment or decision
  2. To provide a basis for comparing projects. It involves comparing the total expected cost of each option against the total expected benefits, to see whether the benefits outweigh the costs, and by how much

finally, that, in CBA, benefits and costs are expressed in money terms"

So, I was fairly close with my initial understanding and - as for many things - cost benefit analysis comes down to money.

This is important in dealing with climate change adaptation projects, which are usually cross sectoral and cut across sectors such as agriculture, environment, fisheries and forestry.

We are usually more comfortable talking about ecosystem management, harvest yields or sustainable environmental targets. We are much less comfortable talking about economics and finance.

As practitioners working on climate adaptation we need to improve in this area.

We need to be better able to evaluate the economic costs and benefits of our projects. This is particularly important as key decisions in all Pacific countries, as in other parts of the world, are taken by Economic and Finance Ministries and their decisions are largely based on financial considerations.

Another advantage of cost benefit analysis is to help us deal with complexity.

As we know, climate change adaptation can be a complex problem to deal with.

For example, programmes can involve several different hazards whose threat may, or may not, change over time.

Further, climate change risks typically exacerbate already existing problems, such as poor or weak capacity or governance, which themselves have a range of different causes and drivers.

The involvement of multiple stakeholder groups further complicates dealing with climate change.

Climate change adaptation, to be successful, must deal with this complexity as well as addressing the root causes of issues, and not just the symptoms.

In this context cost benefit analysis can play an important role in assisting our work on climate change.

Cost benefit analysis is a framework which can help us to logically and systematically work through the various issues that need to be considered when developing and evaluating our PACC projects. It can help us select projects that are sound and that will deliver maximum benefits to Pacific Island communities.

For PACC, this is important for projects that are yet to decide on their preferred activities. It is also important for informing which PACC pilot projects should be up-scaled as part of PACC+ and other initiatives.

Cost benefit analysis can help demonstrate which pilot projects have been successful and should be replicated. They can also help identify which projects have not been so successful and should be "canned".

Cost benefit analysis can help with making informed choices in dealing with donors.

There are currently many donors either supporting or wanting to implement adaptation projects in our region. The level of financial resources available to address climate change adaptation is growing and is likely to accelerate with initiatives such as the Green Fund.

Cost benefit analysis is very useful in helping your countries decide whether a donor project idea is good one and should be accepted, or whether it should be given "the thumbs down".

It can also help in developing 'evidence-based' project proposal submissions to donors that are more likely to be supported.

SPREP views the topic of cost benefit analysis and the broader area of economics as very important in the Pacific. This is reflected in the appointment of the first ever resource economist at SPREP Aaron Buncle who will play a leading role at this workshop.

By the end of this workshop we hope you will have a basic understanding of the cost benefit analysis framework and a clear idea about how to progress such an analysis for your own PACC projects.

It is important to note that SPREP, along with our partners, including UNDP, GIZ, SOPAC and others, are very happy to provide further advice or support on cost benefit analysis, after you return home from this workshop.

We are as far away as the nearest phone or email.

We hope this training workshop and ongoing support provided is useful and worthwhile, and will have benefits beyond the PACC.

Ladies and Gentlemen, welcome again and I wish you all the best for a productive and enjoyable workshop.

Thank you, Fa'afetai lava.

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