Economic Appraisal/Analysis

Economic analysis is an essential tool in project and programme appraisal. It involves the techniques of cost-benefit analysis which compares the total costs of the project/programme to the total stream of benefits flowing to society. It assesses whether the returns are sufficient to justify investing funds. It may also include financial appraisal which assesses the financial viability of the project/programme from the perspective of specific participants (e.g. Sustainable livelihoods guidance sheets whether the returns for individuals and businesses are sufficient incentive for their participation). Macro-economic analysis provides insights into the impact ofcurrent macro policy on the livelihoods of different groups and the possible effects of proposed policy changes.