Step 5.5: Analyse costing results.
Costing results can be summarized and analysed in a variety of ways. Firstly, the results should be summarized for stakeholders based on their organization and subdivided across BIOFIN and national categories. Then more detailed analyses can be carried out. Three detailed analyses of the costs are described here: the relative size of different costs, comparisons of ratio of costs to biodiversity priorities, and cost-effectiveness analysis. These analyses provide an input to the screening of finance solutions in Chapter 6.
The most important way to summarize costing results is annual (per year) cost projections (also called cost statements) for each of the main national targets, organizations, BIOFIN categories, and sectors. Different forms of summary results should be presented graphically. These summaries will help stakeholders compare results and gain a better understanding of the distribution of future inputs (costs) required to achieve different outputs (i.e. biodiversity objectives) across organizations, and types of activities.
Relative costs of different biodiversity results
This analysis compares the results of the costs that can be projected or summarized for different groups of actions. Useful comparisons may include costs over different budget cycles, and for different biodiversity results (at a finer level of detail than the summaries of national biodiversity targets). Costs can be analysed and presented for any of the tags applied, and for any level of the biodiversity strategy/action hierarchy covered by the FNA.
Questions that can be investigated include
-
What are the most prominent costs by code/type (e.g. salaries) and institution?
-
What is the balance between recurrent and investment costs?
-
What are the most relevant cost drivers (e.g. increase in the number of compensation liabilities, price of land)?
-
What are the expected trends in marginal costs (are any economies of scale or diminishing returns identified)?
-
Are there any patterns in financial needs connected to the types of results/actions or by organization?
-
What are the main risks related to the costing assumptions for the relevant period (e.g. currency fluctuations, price of certain services or goods, cost of capital)? This can be calculated using sensitivity analysis.
This analysis should also include a reality check of the expected costs, the relationship between cost and desired results, and a quick review of whether there are alternative approaches to achieving the same results. For example, the Philippines initially explored the option of constructing ballast treatment facilities in all the country’s major ports, but soon realized that the costs were prohibitive for the Biodiversity Management Bureau (BMB). Instead, they identified partner organizations that the BMB could train, and provide technical support to include ballast treatment facilities in future port upgrading plans.
Comparisons of costs to biodiversity priorities
Figure 5.4: Sample Biodiversity Priority and Cost-Comparison Matrix
The costs of biodiversity results can also be organized according to their biodiversity priority score made in Step 2. The prioritization criteria should be focused on specific results (or outputs or outcomes) to be achieved, and not the overall priority of the biodiversity issue in question. For this comparison, the biodiversity results costed can be mapped on a simple matrix with costs and biodiversity priority on the two axes (see Figure 5.4). This can help take into account the relative importance of the different results costed from a biodiversity conservation standpoint.
Higher biodiversity priorities with relatively low costs may help identify the most cost-effective ways to achieve biodiversity goals. Also, this comparison can lead to questions such as how high costs for higher biodiversity priorities could be mitigated (e.g. through economies of scale; management strategies such as competitive outsourcing/bidding; central procurement). Further (optional) comparison of biodiversity results and costs may be useful to select finance solutions for the BFP (Chapter 6). Appendix III discusses the use of cost-effectiveness analysis and cost-benefit analysis to assess biodiversity finance solutions.
