Michael P. Canares HNU Center for Research and Local Governance

Stories in Numbers: Using Financial Indicators to Reveal Household and Community Narratives in Impact Evaluation of Water Projects

Michael P. CanaresHNU Center for Research and Local Governance

Structure of the Presentation

• Conclusion• Background of the paper• Amplifications of the Measures Used• Implications on Impact Evaluation

Research

Conclusion

• While not a substitute to other qualitative and quantitative measurements, financial indicators have the capacity of revealing important stories from the perspective of beneficiaries and communities and reinforce, if not enrich, our understanding of program or project inputs, process, achievements, issues, and concerns.

Do these things mean something?

0

5000

10000

15000

20000

25000

Project Area 1 Project Area 2

Coastal

Upland

Per capita cost of water development project, area classification compared

Problem with auditors and accountants

• Static textbook concepts (e.g. lower per capita costs, the better)

• Deskwork versus fieldwork (e.g. interpreting than experiencing)

• Biased interpretations (e.g. costs over benefits)

The bias of this paper

• Financial indicators are not to be read devoid of “stories from the field”

• Financial indicators, as a matter of fact, tells “stories from the field”

• Financial indicators reveal strong evidence on outcomes and impact to supplement qualitative representations

Indicator 1 (HH): Cost of Getting Water

Traditional comparison of Y1 and Y0

Cost of getting water is computed using per unit costs (e.g gallon or liter)

Household Narrative and Conclusions

‘Before the project, we get water from the pump owned by our neighbor. She charges us 5 peso per gallon. Every week, we consume around 10 gallons. Now, we pay 50 pesos a month for our Level II water system.’

Pre Project(Php5 x 10 x 4 weeks)

P200.00

Post Project 50.00

Net Savings 150.00

This is informative but insufficient. For example, the ‘neighbor’ is two kilometers away, and walk is about 40 minutes due to steep terrain.

Financial Indicators and Conclusions

The indicator expands cost of water by including labour opportunity costs, as well as the differential costs of access due to geographical limitations.

Limitation: There is an implicit assumption that it was productive labour that was affected. What if children are the ones who fetch the water from the source?

Pre-project

P5xP10xP4 wks 200.00

labour cost (imputed) P225/8x5x4wks

562.50

762.50

Post-project 50.00

Net Savings 712.50

Indicator 2(HH): Released Financial Resources

• Indicates amount of funds released for other household expenses

• May be expressed as a percentage of household budget or as a consumption unit in other goods

Financial Indicators and Household Narratives

‘Because water came cheap, we are now able to spend more on other needs of the family.’

Pre project (actual cash outlay) P200.00

Post Project (actual cash outlay) 50.00

Freed up cash 150.00

Percentage of household budget 5.35%

Alternative consumption (rice) 4.17 kilos

Limitation: There is an implicit assumption that freed up resources are used for food and essential consumption items. This may not be true when freed up resource is used for betting on a numbers game.

Indicator 3(CO): Replacement Capacity

• Indicates the ability of the water service provider (association) to construct the same water service facility after end of useful life of current one

FIs, Community Narratives, and Interpretations

‘The facilities’ useful life is 15 years. This means we need to raise sufficient funds to be able to construct it on our own in the long term.’

Replacement Cost P7,856,550.00

Depreciation provision 15 years P6,489,000.00

Differential Cost of new asset P1,367,550.00

Required Net Income Per year for 15 years

P91,170.00

Average income, year 1-5 P65,468.00

Income Deficiency P25,702.00

The association’s options need to be pointed out – increasing water rates, minimizing costs.

Indicator 4 (DA): Per Capita Cost of WDP

0

5000

10000

15000

20000

25000

Project Area 1 Project Area 2

Coastal

Upland

The indicator gives a good sense of how much funds are needed to implement a particular project in similar circumstances, as long as context is equally analyzed.

What are the implications of these on impact

evaluation research?

• Early on, data needed for financial analysis needs to be incorporated as part of baseline data generation

• Research design should consciously incorporate financial indicators to investigate commonalities and variations

Many thanks for the kind attention.