Environmental Project Evaluation in Developing Countries: Valuing the Environment as Input

The following paper suggests that an important evaluation problem in developing countries is assessing the value and optimal use of environmental resources as inputs into production. Essentially, this amounts to determining the best use of land, water and other resources. The paper outlines the simple methodology behind the general evaluation approach, e.g. ensuring the most efficient use of a resource requirese incorporating environmental costs and benefits, and comparing the returns from competing uses. However, implementing this approach raises important issues of valuing the role of ecological services and resources in contributing to, supporting and protecting economic activity. To illustrate these issues, the paper draws on several case studies, such as allocating agricultural land among competing uses (e.g. gum arabic versus annual crops in Sudan), diversion of water from downstream floodplains for upstream water developments (e.g. Hadejia-Jama'are floodplain, Northern Nigeria), and evaluating the benefits of ecological services in support of economic activity (e.g. mangrove-fishery linkages in Campeche, Mexico). JEL classification: O1, Q0, Q2.