Employment-based analysis: an alternative methodology for project evaluation in developing regions, with an application to agriculture in Yucatan

Governmental and non-governmental organizations (NGQs) in developing region s increasingly recognize the links between sustainable development and envi ronmental protection. For this reason, environmental protection efforts in these regions increasingly include sustainable community development projec ts. Unlike most traditional, large-scale development projects, the objectiv e of such projects is to give local inhabitants sustainable economic altern atives to environmentally degrading activities, rather than to maximize the flow of discounted net benefits. The traditional method of project evaluat ion, cost-benefit analysis (CBA), does not provide useful information regar ding the meeting of such objectives. The purpose of this paper is to introd uce, discuss, and provide a brief example of employment-based analysis (EBA ) as a means of project evaluation in developing countries. In contrast to the CBA approach of measuring a discounted flow of net benefits from econom ic options, EBA measures the number of jobs or population support provided by alternative activities using a given resource (typically land) over a gi ven period of time. EBA better incorporates sustainability into project ana lysis by avoiding the use of discounting, directly linking project success with environmental sustainability, and penalizing economic activities that involve income inequality and income/capital flight. EBA is particularly il luminating when applied to small-scale sustainable development projects tha t are part of environmental conservation programs. After a brief descriptio n of the methodology, the motivation, strengths, and weaknesses of EBA are discussed. A simple application of EBA and CBA to alternative agricultural activities (traditional farming, improved farming, and cattle ranching) in Yucatan, Mexico, is then provided. This analysis indicates that, while catt le ranching has a higher benefit-cost ratio, both traditional and improved farming provide more population support and greater contributions to sustai nability. This example serves to highlight the potential benefits to using EBA instead of or in conjunction with CBA in developing regions, along with highlighting some of the strengths and challenges of EBA. (C) 2001 Elsevie r Science B.V. All rights reserved.