Module 3: Economic Analyses
Types Of Economic Analysis
Economic analysis provides a systematic approach to determining the best use of resources. In the context of IPM assessment, it usually involves comparing two or more alternatives using measures such as net grower returns. In IPM, economic analysis is commonly used to compare the user cost and/or the market value of yield or quality gains when implementing IPM practices relative to using conventional pest management practices.
The types of economic analysis that you might find useful include:
- Cost effectiveness analysis: evaluates which program or policy creates the desired result at the lowest cost
- Cost-benefit analysis: compares the economic pros and cons of policies and programs to help decision-makers identify the best or most valuable options to pursue.
- Partial budget analysis: determines the net benefit by only examining the costs and gains that change for a program (e.g., using different pesticides or practices)
How To Conduct An Economic Analysis
To conduct an economic analysis, you will need to complete a number of logical steps. If you use a Logic Model to plan your evaluation, as recommended in Module 1, you should find that the steps required to estimate and measure economic impacts fall naturally into the evaluation process. The steps are:
- Determine the issue (evaluation objective)you want to address (what impact or change do you want to measure?).
- Decide who you need to get the information from (whose actions generate the change, who pays the costs, who gets the benefits?)
- Estimate the costs and benefits (in measurable terms) associated with each option that people can choose.
- Determine your method for analysis (decide whether you want a benefit-cost analysis or a partial budget analysis)
- Collect data from the relevant people.
- Carry out the analysis.
- Summarize the results of the analysis
- Report your findings.