Multicriteria analysis in the appraisal of projects : the case of Santa Catalina Watershed project in the Philippines

Abstract

This study briefly reviews the conventional project appraisal method and presents a new method that takes account of the multiple objectives, conflicts of interests, externalities and intangibles in projects dealing with public goods. A brief historical perspective of traditional methodologies i3 presented which provides a starting point in recommending an alternative appraisal method called Multicriteria Analysis. The discussion of its theoretical premises is presented in earlier chapters. This is followed by a chapter that provides relevant information about the Philippines and about the case study area, Santa Catalina Watershed. The last chapters present an empirical application of a multicriteria analysis variant, the concordance analysis, on the case study area. * The results of the study show that the new methodology can incorporate many issues that are otherwise left out in conventional economic-financial analysis and can overcome some of the major difficulties of cost-benefit analysis. A significant feature of the methodology is its departure from pursuing a single objective function and its attempt to incorporate as many objectives as are considered necessary in the decision framework to reach a 'satisficing compromise" solution. While it does not consider trade-offs in the analysis, the methodology provides for an inter-active procedure which draws the decision-maker into the evaluation process and in the process reveals his hidden preferences and solve the problem of trade-offs. The issue of time may also be dealt with by compounding the impacts forward to a common terminal date. Uncertainties are taken account of by a more sophisticated sensitivity analysis through stochastic approach. The study recognizes that the methodology has a great potential in giving more information to a decision-maker and a stronger basis for deciding within the context of conflicts of interests and multiple objectives. It is recommended, however, that the methodology be applied on an exploratory basis since data needed may not yet be available in the Philippines or their collection may prove to be lengthy.