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Developing cost-benefit analysis guidelines for USAID

The United States Agency for International Development (USAID) is responsible for managing over $16 billion in non-military aid and assistance around the world. Among the agency’s projects are many that conserve and protect threatened ecosystems, contribute to greenhouse gas emissions reduction, and support community adaptation to the effects of climate change.

In 2015, USAID launched the Biodiversity Results and Integrated Development Gains Enhanced project (BRIDGE) to support their goal of “integrating biodiversity as an essential component of development.” The program rests on USAID’s recognition that “biodiversity provides ecosystem goods and services that support sustainable development.”[1] Ecosystem services are integral to the provision of things we all depend on, like fresh water and pollination of crops.

Cost-benefit analysis (CBA) is one of the tools USAID uses to select, design, and improve its programs. CBA is a systematic process for quantifying the costs and benefits of decisions, policies, or projects, and evaluating alternatives. Because ecosystem services can be difficult to measure and are often unrecognized, they are not typically included in decision analysis. As part of BRIDGE, USAID is exploring means to increase the use of ecosystem service valuations in Agency CBAs.

To support this work, CSF was contracted to generate a set of guidelines combining CBA best practices with USAID’s approaches and needs. CSF put together an expert team to respond, including staff (Sr. Economist Aaron Bruner and Resident Fellow Cecilia Simón), and two collaborators – David Simpson, former Director for Ecosystem Economic Studies at the US Environmental Protection Agency, and Bahman Kashi, Founder of Limestone Analytics.

Our team interviewed staff from USAID headquarters and field operating units, carried out a broad literature review, and developed a set of recommendations for USAID CBA practitioners and USAID as an institution. The recommendations include step-by-step guidance for incorporating ecosystem service valuations into Agency CBAs.

Recommendations were presented to USAID on March 27, 2018, in attendance was Karl Fickenscher, Deputy Assistant Administrator in USAID’s Bureau for Economic Growth, Education and Environment (E3), and staff from a broad range of sectors at the agency. Given the broad scope of USAID’s work and the Agency’s commitment to impact, we are hopeful that the recommendations, coupled with piloting and training, will support a systemic change in how USAID considers biodiversity.