Estimating Secondary Benefits

Secondary benefits refer to those additional effects which may originate from the economic linkages of a project. For example, the sense of security against threat of inundation may induce farmers to invest in land development and irrigation, change cropping patterns, raise cropping intensity and thereby raise agricultural production. It may induce investors to start new  industrial or service enterprises. While doing so, the associated costs, such as the additional costs of inputs like fertilizers, irrigation, pesticides, etc. which could be incurred, should be deducted to get an estimate of the net benefits on account of flood protection.

Several other economic development activities, including roads, railways, schools and hospitals, may be encouraged due to a reduction of flood risks. However, these might or might not follow the execution of a flood management project in the area. It is a matter of judgement as to how much future development should/ could be included. Clearly, the list should include only those effects that may be easily identified within the lifetime of the project and are a logical consequence of it.

Another type of secondary benefit (effect) may originate from the need to provide inputs to project activities through backward linkages, in contrast to forward linkages discussed above. For example, a brick or cement manufacturing activity may crop up to provide bricks and cement to a flood management project.

There has been much discussion among economists and others as to the extent to which secondary benefits do in fact exist. Many argue that values claimed for such benefits represent outputs that could have been attained even in the absence of flood protection schemes: either the production could have taken place in the region in any event or it could have occurred elsewhere as a result of comparable investment. When viewed from a national perspective this argument is difficult to refute. However, the reasons for developing programmes are often regional or local in focus rather than national and in such instances secondary benefits may well be a very persuasive reason for taking action. But the problems of their measurement are formidable. These provide scope for manipulation so it is prudent to restrict inclusion to only those that can be predicted with a good degree of certainty.

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