Network Paper 15: Cost-effectiveness Analysis

Author(s)
Hallam, A.
Publication language
English
Pages
34pp
Date published
01 Apr 1996
Type
Research, reports and studies
Keywords
Research methodology
Countries
Rwanda
Organisations
ODI
In a context of stagnating levels of official development assistance, bilateral
expenditures on emergency assistance are rising dramatically, leading to increased
scrutiny by evaluation departments of the way in which such assistance is
provided. As a result, cost-effectiveness analysis of relief operations is now being
accorded greater attention.
 
Cost-effectiveness analysis is not the same as cost-benefit analysis. It does not entail
valuation of human life or quantification of human suffering, and is of use in those
situations where benefits cannot be reasonably measured in monetary terms.
Cost-effectiveness analysis is, therefore, a potentially valuable tool for the
evaluation of relief operations, where the aim is to save lives and reduce suffering.
It is essential that the relationship between costs and performance of relief
activities be fully explored and understood: in a world where numerous competing
demands are being made upon finite aid resources, the inefficient use of funds in
one operation may reduce the availability of funds for other operations where
needs are equally critical.
 
Formal cost-effectiveness analysis of relief operations can, however, be fraught
with difficulties, both practical and methodological. Such difficulties arise from the
fact that relief operations characteristically take place in complex and rapidly
changing environments, and involve a large number of donors, UN agencies and
NGOs undertaking a wide range of activities. As a result, the particular effects of
any one intervention can be impossible to isolate. In many cases, cost-efficiency
analysis, which investigates the process of aid delivery rather than the outcome,
may be a more appropriate tool.