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ERD Technical Notes

The ERD Technical Note Series deals with conceptual, analytical, or methodological issues relating to project/program economic analysis or statistical analysis. Papers in the Series are meant to enhance analytical rigor and quality in project/program preparation and economic evaluation, and improve statistical data and development indicators.

  • Utility Tariff Setting for Economic Efficiency and Financial Sustainability - A Review
    1 Aug 2008

    Utility Tariff Setting for Economic Efficiency and Financial Sustainability - A Review

    Herath Gunatilake, Pradeep Perera, and Mary Jane F. Carangal-San Jose review the literature on utility tariff setting with an emphasis on economic efficiency and financial sustainability. The paper discusses the merits as well as the practical limitations in applying marginal cost pricing, and presents details on the estimation of revenue requirements of utilities. It also discuses issues related to reconciliation of economic efficiency and financial sustainability objectives in tariff setting.
  • Good Practices for Estimating Reliable Willingness-to-Pay Values in the Water Supply and Sanitation Sector
    21 Dec 2007

    Good Practices for Estimating Reliable Willingness-to-Pay Values in the Water Supply and Sanitation Sector

    Feasibility studies on water supply and sanitation (WSS) projects require to examine economic viability, where willingness-to-pay data constitute the basis for assessing effective demand and, sometimes, benefits of WSS services.
  • Pro-Poor Growth: Concepts and Measures
    1 Jun 2007

    Pro-Poor Growth: Concepts and Measures

    This technical note reviews the current approaches to defining and measuring pro-poor growth. For this purpose, five approaches that have been most commonly used in recent years are selected. Methodological and empirical issues related to these approaches are presented to analyze each approach's relative strengths and weaknesses in defining and measuring pro-poor growth.
  • Critical Issues of Fiscal Decentralization
    1 Feb 2007

    Critical Issues of Fiscal Decentralization

    Norio Usui writes that as the decentralization process witnessed across Asia and the Pacific region has become an irreversible trend, a growing number of Asian Development Bank projects and technical assistance involve components of delivering services at the subnational level. This paper summarizes key conceptual issues of decentralization, and discusses major routes for decentralization to improve public services and address problems in implementing decentralization.
  • Tourism for Pro-Poor and Sustainable Growth: Economic Analysis of Tourism Projects
    1 Jan 2007

    Tourism for Pro-Poor and Sustainable Growth: Economic Analysis of Tourism Projects

    Tun Lin and Franklin D. De Guzman introduce a simple analytical framework that would underpin the systematic economic analysis of tourism projects. Given the increasing importance of tourism in economic development and the rise of "pro-poor" tourism development strategies, this framework would help address theoretical and practical challenges in the economic analysis of tourism projects.
  • Willingness-to-Pay and Design of Water Supply and Sanitation Projects: A Case Study
    21 Dec 2006

    Willingness-to-Pay and Design of Water Supply and Sanitation Projects: A Case Study

    Using a case study, this paper demonstrates the usefulness of willingness-to-pay studies in designing water supply and sanitation projects.
  • Forecasting Inflation and GDP Growth: Automatic Leading Indicator (ALI) Method versus Macro Econometric Structural Models (MESMS)
    1 Jul 2006

    Forecasting Inflation and GDP Growth: Automatic Leading Indicator (ALI) Method versus Macro Econometric Structural Models (MESMS)

    This paper compares the forecast performance of the automatic leading indicator (ALI) method with the macro econometric structural model (MESM) and seeks ways of improving the ALI method. Inflation and gross domestic product growth form the forecast objects for comparison, using data from People's Republic of China, Indonesia, and Philippines. The ALI method is found to produce better forecasts than MESMs in general, but the method is found to involve greater uncertainty in choosing indicators, mixing data frequencies, and utilizing unrestricted vector auto-regressions.
  • Setting User Charges for Urban Water Supply: A Case Study of the Metropolitan Cebu Water District in the Philippines
    11 Jun 2006

    Setting User Charges for Urban Water Supply: A Case Study of the Metropolitan Cebu Water District in the Philippines

    This paper gives an example of the kind of tariff review that could be the basis of policy discussions, and also of project design and analysis.
  • Evaluating Microfinance Program Innovation with Randomized Control Trials: An Example from Group versus Individual Lending
    1 Mar 2006

    Evaluating Microfinance Program Innovation with Randomized Control Trials: An Example from Group versus Individual Lending

    This paper presents an application of the randomized control trial methodology to evaluate modifications in the design of microcredit programs. As microfinance becomes an even more popular tool for fighting poverty, institutions innovate rapidly in their products and programs. Policymakers and practitioners should know the relative impact of different designs, both to the client (in terms of welfare) and to the institution (in terms of financial sustainability).
  • Debt Management Analysis of Nepal's Public Debt
    1 Dec 2005

    Debt Management Analysis of Nepal's Public Debt

    This paper estimates an optimal target portfolio of sovereign debt for Nepal that minimizes long-term financing cost. In the analysis, a practical framework is applied, which is built upon the traditional mean-variance efficient frontier approach and simultaneously employs a relatively new concept of cost-at-risk (CaR). The framework is flexible enough to incorporate other factors such as liquidity risk. Simulation results show that the Nepali economy needs to increase longer-term domestic borrowing instruments, and that the maturity structure of domestic bonds should be simplified.

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