EFB106 Cost-Benefit Analysis for Project Appraisal - Adani Mine Case Study Assignment Help

QUESTION 1

Quantification of The Environmental, Social and Economic Impact of The Projects as Reported in Fahrer (2015)

Environmental

According to Lodhi (2018), in the context of the appraisal of the major projects such as that of the Adani coal mine Project, the environmental impact must be appropriately appraised and described. This must be possibly ensured with recourse to the state of the art quantitative and qualitative assessment techniques. As suggested by Snell (2009), multi criteria decision analysis is the best and perhaps the most useful assessment and appraisal technique in this regard. However, unfortunately, the quantification of the environmental impact of the Adani coal mine Project has not been appropriately appraised and described in the work of Fahrer (2015). 

In order to understand how the environmental impact of a major Project such as the Adani coal mine Project must be appropriately appraised and described, it is important to consider two different examples. The first example is that of the environmental cost of the construction of highway which might as well be approximated by the prospective loss of value of the properties near that Project (Stavreski, 2016). The underlying rationale behind this is that of the increased carbon emission and noise along with a degraded landscape. The work of Fahrer (2015) has not sufficiently described or appraised this environmental impact of the three Projects. The second example to be considered is that of the environmental cost of a major polluting plant such as an oil refinery. This environmental impact may potentially be estimated by the increment in the health expenditure of the workers and the residents of the nearby housing schemes (Hamman, 2016). Although the cost benefit analysis framework allows room for only a crude estimate of this kind of an environmental impact of a major Project, it is it important to note that no such effort has been made in the work of Fahrer (2015) concerning at least the capture of the most relevant costs to the environment.

For the sake of argument, it may as well be argued that it is only naturally impossible to assign monetary values to all of these environmental costs. However, this does not hold ground in the case of Fahrer (2015) primarily due to the reason that not a single environmental cost has been quantified in the report, despite the claim which has been made in the work of the analyst being that of accompanying the cost benefit analysis framework with a consideration of the environmental impact statements. Along with that, the underlying claim which has been made in the work of the analyst does not propose a subjective assessment of the respective results of the environmental impact statements (Konkes, 2018) and therefore, it is only naturally imperative to deduce that no quantification of the environmental impact of the Adani coal mine Project has been made in this work (Lodhi, 2018).

Social

The work of Fahrer (2015) has, to some extent, succeeded in considering the social impact of the coal mine Projects. There are various aspects of the social impact of the Project which have been quantified in the cost benefit analysis of the same. The work of Fahrer (2015) entails two key considerations in this area of focus. The first consideration is that of the social costs for the Project which must be used in a cost benefit analysis of major projects as this one includes the sum of private costs, public expenditure and externality costs. These are some of the benefits which are exclusive of the private benefits obtained by the Project (Clarkson, 2019). The second consideration is that of the payment of taxes to the government by the project holder such as in case of a mining project, royalties are paid to the government. The author states clearly that these are some of the social impacts which must be accounted for justifiably.

The inclination given towards the end of the cost benefit analysis is that this Project may as well have externality benefits which would only naturally add to the social value of the same. However, at the same time, a statement is made namely that the CGE analysis which has been conducted for the Project cannot simply quantify the wider social impact of the same, which makes it only naturally imperative for the readers to deduce that not much attention has been paid towards the quantification of the social impact of the Project (Clarkson, 2019).