Cost to Benefit Analysis to Assess Economic
Impact of Constructing a Bridge in RuralBolivia
------
Project Summary
This proposed research project will utilize the methods of cost benefit analysis (CBA) to determine the economic effect and per-dollar efficiency of building a bridge in rural Bolivia. I will work alongside the Duke chapter of Engineers Without Bordersas they construct the bridge during the summer of 2009[1]. Since EWB projects are funded entirely by donations and philanthropy grants, it is important to determine whether this money is being spent efficiently. If the CBA that I propose indicates a large benefit in comparison to the project costs, this will be a signal that EWB should proceed with its plans to reproduce the bridge project in additional locations. Alternatively, if the CBA indicates a low benefit to cost ratio, EWB will reconsider its plans for additional Bolivian infrastructure development projects.
Planned Research Agenda & Methodology
Much of the necessary research data will be obtained through (1) EWB contacts in Bolivia and (2) a survey to be administered to a random sampling of village households. I am working with Dr. Marc Bellemare, professor at the Terry Sanford Institute of Public Policy, to develop this survey. While I am in Bolivia, Dr. Christine Beaule, professor of Latin American Studies at the Duke University Writing Program, will be on site to help me refine and improve this project as my research progresses. I will spend eight weeks in Boliviato complete this project. Project dates: May18 - July14.
Below is a proposed timeline:
Week 1&2: Acclimatize to the high altitude of western Bolivia. Adjust survey materials to incorporate new questions unaccounted for before arriving in Bolivia. Work alongside EWB to assess price and quantity of required construction materials. Determine costs associated with hiring Bolivian construction consultants.
Week 3:Visit prefecture office to collect data about the region including population trends, demographics, average education, income, family size, etc. Refine current data regarding flood intensity and flood frequency.[2] Confirm rainfall data and average number of days per year that river crossing is impassable.
Week 4: Study flux of traffic over proposed bridge site. Record the quantity of trucks carrying perishable crops toward and away from the city of Oruro—the major commerce center in proximity to Obrajes.Begin administering the household survey with the assistance of an EWB team member. Survey will ask questions to help quantify the foregone benefit due to the impassibility of the river. For example, if it takes four hours to find a river passage during the rainy season, one would multiply these four hours by the respondent’s opportunity cost of time to obtain the respondent’s transaction cost of not having a bridge.
Week 5: Analyze the effect that a bridge will have on education. Determine the number of annual school absences that result from inability to cross the IrumaRiver. Visit local schools to obtain a sense of how school attendance correlates to matriculation at institutions of higher education.The household survey will help to evaluate correlation between higher education and household income.
Week 6: Become familiar with agricultural production of the Oruro region. Record information regarding crop growing seasons, field output, and market prices. Determine lost income due to due to a farmer’s inability to cross the river and transport crops to market.
Week 7&8: Conclude process of administering household surveys. Compile research and finalize cost-benefit analysis. Conduct sensitivity analysis. Maintain regular contact with Duke faculty advisors to ensure that enough data has been collected. These last two weeks may need to be spent in Oruro which is the region’s largest city and only reliable source for internet access.
Contribution to Existing Research
The strongest contribution of my research will be toward literature concerning civic engagement and humanitarian aid. Organizations in these two industries have provided all of the funding for the EWB project in Bolivia. They paid for the building materials, skilled labor, and the living costs of the EWB group. A CBA will determine the economic effect and per-dollar efficiency of their donations.
My research will build upon studies primarily conducted by the various development banks (ADB, IADB, World Bank). A majority of the literature that I have reviewed about Bolivia is produced by these organizations. My work will cover and contribute to a wide variety of topics, ranging from education to local weather patterns. This means that I will have a lot of work ahead of me to familiarize myself with the region. The benefit of acquiring the required breadth of knowledge is that I will gain a broad perspective from which there are many options to build a public policy independent study once I return to Duke. While in Bolivia, I will undoubtedly find many societal contradictions to comment upon and further investigate, such as Silvina Gvirtz’sobservations ofthe tension confronting rural education.[3]
Foreign Language Ability
I have taken one year of high school Spanish. My reading, speaking, and writing skills are at the beginner level. I am currently practicing my Spanish language skills with the Rosetta Stone language learning software. While in Bolivia, Spanish-speaking members from the EWB team have agreed to assist me when my research requires Spanish proficiency. We have three team members who are fluent in Spanish, and one other who is proficient. I will also be working with Dr. Beaule during the entire process; she is fluent in Spanish and is also familiar with the local Quechua dialect.
Faculty Advisors
Marc F Bellemare, Assistant Professor of Public Policy and Economics
132 Rubenstein Hall | 919.613.9382 |
Areas of Expertise: International, Applied Economics
Current projects: Sharecropping, Contract Farming, Price Risk, Applied Contract Theory
Education:Ph.D. (Applied Economics),Cornell University,2006
M.Sc. (Economics),Universite de Montreal,2001
B.Sc.,Universite de Montreal,1999
Christine D Beaule, Mellon Lecturing Fellow, Professor in University Writing Program
On leave at University of Hawaii | 808.956.8435 |
Areas of Interest: Archaeology (Anthropology), Latin American Studies, Bolivia, Household Archeology, Andean highlands (altiplano), Pastoralism Settlement Patterns, Exchange networks, Urbanism, Ethnicity
Education:PhD, University of Pittsburgh, 2002
Latin American Studies Graduate Certificate, Univ. of Pittsburgh, 2002
MA, University of Pittsburgh, 1999
Bibliography
------
Andersen, Lykke E. “Wage Differentials between Bolivian Cities.” Economía Política. 1999.
Aruna, D. (Dattatri). “Social cost-benefit analysis.”Madras : Institute for Financial Management and Research ; Bombay : distributors, Vora, 1980.
Beech, Jason and Silvina Gvirtz. “Going to school in Latin America.” Westport, Conn.Greenwood Press, 2008.
Bellemare, Marc and Christopher Barrett. “An Ordered Tobit Model of Market Participation: Evidence from Kenya and Ethiopia.” American Journal of Agricultural Economics.Volume 88 Issue 2,Pages324–337, 2006.
Calderon, Cesar A. and Luis Serven. “The Effects of Infrastructure Development on Growth and Income Distribution.” World Bank Policy Research Working Paper No. 3400. 2004.
Flyvbjerg, Bent. “Decision-making on mega-projects: cost-benefit analysis, planning and innovation.” Cheltenham, UK ; Northampton, MA. 2008.
Harberger, Arnold C. Project evaluation: collected papers. Chicago: University of Chicago Press, 1976.
Leonardo F. De León y De León et al. “Rural transport of food products in Latin America and the Caribbean.”Rome : Food and Agriculture Organization of the United Nations, 2008.
Nuno Limão, Anthony J. Venables. “Infrastructure, Geographical Disadvantage, Transport Costs, and Trade.” The World Bank Economic Review, Vol. 15, No. 3 (2001), pp. 451-479. Published by: OxfordUniversity Press
Sassone, Peter G. Cost-benefit analysis : a handbook. New York : Academic Press, 1978.
Vicente Fretes Cibils, Marcelo Giugale, Connie Luff. “Bolivia : public policy options for the well-being of all.”Washington, DC : World Bank, 2006.
Personal Statement
------
I have two primary academic and career interests: infrastructure development and economic growth. After graduation, I hope to combine the two by using infrastructure development as a means to nurture economic growth. I see opportunities in both the domestic and international spheres.
Within the United States, I hope to help improve public mass transit. Without substantial growthof regional public transportation systems, I am concerned about the future viability of American suburban culture. As suburban populations grow, increased transit times due to vehicle traffic, coupled with rising energy prices, will make individualized transportation an unaffordable means to travel into the city.
Internationally I hope to spend a portion of my life working in countries of low socioeconomic development. I would like to improve basic infrastructure – roads, bridges, and sanitation facilities – because infrastructure is a key component for economic growth. I am exited about this career path because it provides the opportunity to integrate diverse experiences into my life. I believe that a person can do good things for himself and help other people at the same time.
I expect that my research project will help me to better understand the ethics of NGO work, specifically as applicable to the implementation of philanthropy-funded infrastructure projects. Before I commit myself to a career of international infrastructure development, I feel an obligation to understand the per-dollar efficiency of the money that funds such projects. If the cost efficiency is low, I feel that it is unethical to sustain this type of work and I will seek to find another way to provide infrastructure.
The time that I spend in Bolivia will allow me to better understand what the communities ofLatin America truly need in order to develop. In honesty, while I am working on this project and interviewing people in the Bolivian communities, I hope to find that my conception of development is completely wrong… perhaps conceived from a western bias. I have found that criticism is the force that best motivates me. This is why I write grants and this is one of the reasons why I want to conduct a research project; otherwise I would not have the chance to fail and through failure, better understand how to use my engineering knowledge for the greatest societal benefit.
Budget Rationale
------
My total budget is $3464. The breakdown is listed below. All figures are based on estimations from students who traveled to Bolivia in 2008 for the EWB site assessment trip.
1.Travel-related Expenses: $1549
The least expensive flight from Oklahoma City, Oklahoma toLa Paz, Bolivia, as quoted by Travelocity.com, is $1,164. The fee for obtaining a visa is $135.00. Within Bolivia, I expect to spend $250 on taxis and mini-buses in order to: (1) travel among the five villages that this bridge will benefit, (2) commute weekly to the City of Oruro, and (3) travel within Oruro.
2.Meals: $580
I have budgeted $10 per day for food. Since I will be in Bolivia for a total of 58 days, I expect food to cost $580.
3.Lodging: $800
Hotels in Bolivia are typically about $20 per night. During the nights that I am in Obrajes, I will share a hotel room with an EWB team member and thus pay about $10 per night. When I travel to Oruro I will not have a roommate and will pay the entire $20 fee to rent a hotel room. Bedding linens will cost approximately $50.
4.Research Materials: $215
Research materials consist of a disposable SIM card and airtime ($100), internet access ($35), reference books ($30), and miscellaneous items ($50).
5.Other: $320
In need to be vaccinated for Yellow Fever and purchase medications for travelers’ diarrhea. Including the consultationfee, these health preparations will cost approximately $300. In the villages along the IrumaRiver, I will give small gifts as a gesture of good will. I expect to pay approximately $20 for these items.
1 of 6
[1]The Bolivian communities of Condor Chinoka, Iruma, Jachuma, and Obrajes annually experience transportation and mobility problems when the IrumaRiver floods during the rainy season (November to April). The channel transforms from a shallow stream during the dry season to an impassable river. The local communities are separated from their pasture, fields, schools, and health clinics on the opposite bank. Most damaging, however, is the fact that villagers are also isolated from the City of Oruro, the market center where they buy or sell crops, thereby limiting the level of welfare that they can attain.
[2] Reference to data obtained in July 2008 during an EWB site assessment trip.
[3] In her book “Going to School in Latin America,” scholar of Latin American education Silvina Gvirtz concludes that education is not universally welcomed in rural communities. Some view “[education] as the salvation that will lift their children out of poverty,” while others condemn it as a destructive force that will devalue indigenous culture and heritage.