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Project Appraisal and Finance

Socio-Economic Appraisal
Mona Iyer
Practical Approaches to SEA
• Why - SEA
• When-For what type of projects/what
• Controlled/guided by…..
• How to carryout
• Limitations/biases/errors
• To identify impacts of development
activity and facilitate planning and
decision making
– (eg coastal areas, marine ecology-land
reclamation in kerala backwaters,
Kalpsar project)
• As a requirement for fund/loan disbursal
• As a legal requirement-some aspects
• To identify benefits of
technology/product in the market
– Eg Vodafone- SIM project, AMC Bond
• Benefits of training/technology transfer
to the users (eg milk co-operatives)
• When the
change is proposed
• After the
change is in place
• SEIA Not a Mandate by Law
separately, part of EIA- Moral
responsibility in larger interest
– Defined by Governments
• Sector specific
• State/ Geographic location specific
– by lending agencies
– by Communities/individual affected to
have voice in decisions
How-Typical Components
• Generally assessment should be across
population- social equity
• Assessment could focus on
– Gender
– Particular class (income)
– Particular aboriginal community
• What matters is not only the physical
changes around the projects but the
meaning, perceptions and social
significance of these changes to the
local/affected communities.
Typical Socio-Economic Assessment
• Population Characteristics
– Population Change Ethnic and racial /caste distribution
– Influx or outflows of temporary workers /Seasonal residents
• Community Structures
– Voluntary associations /Interest group
– change Employment/income characteristics
– Employment equity
– Industrial/commercial diversity
– Presence of planning and zoning activity
– Change in community infrastructure/resources
• Political and Social Resources
– Stakeholder Leadership capability, Distribution of power and authority
• Individual and Family Changes
– Perceptions of risk, health, and safety Displacement/relocation concerns
– Trust in political and social institutions
– Attitudes towards policy/project
– Residential stability -Family and friendship networks
– Concerns about social well-being
• Methods of projecting the future -the
heart of social assessment.
• most fall into the following

• Comparative method; Straight-
line trend projects taking an
existing trend and simply projecting
the same rage of change into the
• Population multiplier
methods(each specified increase
in population implies designated
multiples of some other variable,
e.g. jobs, housing units);
• Scenarios(1) logical-imaginations
based on construction of
hypothetical futures through a
process of mentally modeling the
assumptions about the variables in
question; and (2) fitted empirical-
similar past cases used to analyze
the present case with experts
adjusting the scenario by taking
into account the unique
characteristics of the present case;
• Expert testimony
• Computer modeling involving the
mathematical formulation of
premises and a process of
quantitative weighing of variables);
• Calculation of "future foregone" "
(a number of methods have been
formulated to determine what
options would be given up
irrevocably as a result of a plan or
project, e.g., river recreation and
agricultural land use after the
building of a dam).
What does it give
• scientifically reasonable
assessment of the probable
impacts in advance of the
development event.
• It is a very different matter from
providing solid proof of impacts
after the impacts occur and all the
evidence is in! Generally
Environmental and Socio-Economic
Appraisals/Impact Assessments are by
their nature anticipatory1.

• 1The Interorganizational Committee on Guidelines and Principles for
Some limitations/common
At every step/stage. Some typical errors are:

• Problem formulation :
– objectives v/s data collection tools and techniques-
iterative till survey groups and tools are finalised
• Project definition:
– Baseline information, influence area/population
• Sample size selection:
– Statistical relevance and resource/time availability
• Sample locations:
– Within influence area , co-operative
respondents/amenable to survey, presence of
• Questionnaire :
– Language-translation to retain essence, length,
sequencing. (initiate with FGDs , pilot surveys,
informal meetings)
• Data profiling/analysis:
– Error in entry, spread sheet errors of formula,
Other useful references
• Operational Policies, The World Bank
• Guidelines, JBIC, ADB
• Sector/Country Specific guidelines
based on project type