Economic analysis of water infrastructure: have we got it right?

Abstract

The paper describes shortcomings of the general economic analysis procedure adopted in water infrastructure development projects in Sri Lanka. As a ease study an application of the'Educated Tradfl-off framework in the Ma Ova river basin is used to illustrate the shortcomings of general economic analysis procedure. lTiis framework facilitates ttie systematic identification of resource uses and tl^e possible Tange of environmental and social impacts l>y the water infrastructure project, through fhe involvement (consultation and participation) of key Stakeholders. The study revealed two types of shortcoming* (hat result in erroneous economic indicators: first, the lack of a competent process lo establrsh the baseline situation leading to tion'-inetusioii of some important social and environmental impacts, both positive and negative., by the project and, second, deviations from reasonable practices cither due to negligence or on purposes that give decision makers optimistic data which could resuft in questionable decisions.