The current use and potential of cost bene fi t analysis in water sector projects

The investment needed in global water infrastructure is significant. Infrastructures in water supply and sanitation alone are expected to require USD 6.7 trillion by 2050. These infrastructures must provide investment justifications when seeking funding from disbursement sources, in competition with other services (such as health, education, transport, elderly care etc.). We present a review that identifies monetary valuation gaps in regional and global cost benefit analysis (CBA) guidelines that underpin investment justifications. Case studies of Scandinavian appraisal reports written according to these guidelines indicate an alarmingly low use of monetary valuation on socioeconomic and environmental impacts caused by water sector projects. The findings suggest a need for broader and more accessible recommendations for water sector specific valuation methods. The need to develop a more accessible CBA framework for water infrastructure project managers is theoretically discussed, with emphasis on utilising monetary valuation methods and secondary source data. We identify valuation methods fragmentally discussed in the guidelines that should be adapted and applied, in time and cost-efficient ways, to water infrastructure projects.


INTRODUCTION
Most water infrastructures are public entities, fiscally not profitable, environmentally and socio-economically crucial, and depend on disbursements. Therefore, decision makers and funding bodies must be made aware of both the financial, socioeconomic and environmental value of these projects (Sartori et al. ; Bouzit et al. ). Cost benefit analysis (CBA) is applicable in most fields and is often a required analysis step by decision makers responsible for awarding disbursements. Although the World Bank, Asian Development Bank, the European Commission (Sartori et al. ) and others have published CBA guidelines, they somewhat diverge in methodologies and insist on CBA expertise to execute the analysis. Several reports indicate an underutilised rate of use of these guidelines in the water sector and point to reasons such as a sector-wide lack of access to experts that execute CBA beyond financial evaluations. Projects suffer from a lack of access to CBA experts, alongside scepticism of both the robustness and need for CBA (Pollak ).
CBA is a decision support tool often required by disbursement sources, such as national governing bodies and regional and global financing institutes, to assess the impacts of an infrastructure project to society (Pearce et al. ). CBA has early roots. Historically, we find that the underpinning framework and execution of CBA have been tailored to fit the function of the needs of development policies. Initially, until the 1970s, the traditional approach looked to increase the level of welfare in monetary terms.
From the 1970s, the introduction of socio-economic factors appeared, to address equitable income distribution (Rolfe et al. ). From the 1990s onward, CBA with environmental externality valuations have been incorporated with more regularity. Today, CBA are used to win disbursements for water infrastructure projects in a funding pool that is limited and competed for by other sectors. Progress reports on United Nations sustainable development goals highlight that after following several years of steady increases, official development assistance disbursements to the water sector declined by two per cent from 2016 to 2017. However, disbursement commitments to the water sector jumped by 36 per cent between 2016 and 2017, indicating a renewed focus by donors on the sector (Guterres ). Water infrastructure projects apply for funding from limited disbursement funds in fierce competition with public health, roads and transport, capacity building, energy, resilience, military and education sectors. Therefore, the water sector cannot afford to ignore the non-market benefits of their projects in these competitive appraisal processes. Furthermore, disbursement funding sources and society as a whole cannot afford to continue investing in non-modular infrastructures in the water sector. Investments in water distribution networks and treatment facilities could avoid repeating past mistakes, such as sunk-hole investments that create fiscal With SDG target 6A, United Nations sets a favourable context to monetarily quantify cost-benefits of new technologies in water infrastructure appraisals. Water infrastructure in the developing world are holistically net beneficial (United Nations ), meaning their utility to society is net beneficial if socioeconomic and environmental impacts are also considered against financial costs. Justifying the worthiness of a project in such holistic terms is crucial in both the global and local disbursement context. As a rule, public water infrastructures cannot recover financial investment costs through market revenue streams such as tariffs.
In most economies, developing ones in particular, most public infrastructures may appear as sunk cost (i.e. costs not recoverable through other parts of society) if their values are not taken into account (Hussain et al. ; Quah ). Lagging on identifying the holistic value of projects leads to disadvantages when bidding for disbursement; not utilising valuation methods that other public sectors apply with relative success arguably leads to water infrastructures not winning funding in competition with these sectors. The infrastructures range across new build, operational, renovational, rehabilitative and decomissioning projects, as summarised in Table 1.
From assessments of reports within its own institute, global financing institute the World Bank identifies that approved appraisals over the past 20 years for infrastructures listed in Table 1

METHODOLOGICAL FRAMEWORK
Therefore, this paper looks at the current state of CBA by analysing the guidelines available to infrastructure projects seeking disbursements, and by analysing the practical application rate of CBA in the water sector. The paper adopts the methodology from a World Bank internal review of CBA execution in practice (Ward ) and extends it to a wider assortment of impact assessment guidelines while maintaining a focus on applicability to the water sector.
The use of applying the above methodology to multiple case studies of submitted disbursement proposals extends the methodology underpinning several disbursement guideline reviews (World Bank ).  We evaluate 15 CBA underpinned guidelines by regional and global financing institutes and governing bodies against the valuation method branches that comprise the total economic value framework. This approach identifies the major disbursement CBA guidelines, the content differences, the impacts each institution recommends projects to monetarily value, and how well the guidelines are practiced in reports submitted from a range of water sector projects in Scandinavia. The findings are compared against the categories of the total economic value framework, to identify which valuation methods and type of impacts are most widely underutilised in water sector CBA. Each of these underutilised valuation methods can provide decision makers insights on water projects impacts and will be outlined.
The theoretical framework is best illustrated by the grey box indicating the transition between current CBA practice as identified in literature, and the future of a more holistic, practically applicable CBA in the water sector. The paper will discuss the four tenets to transition an underutilised decision support tool in the water sector to a holistic and applicable CBA. The grey, chequered rectangle in Figure 1 discusses the four tenets of making monetary valuation more accessible; identifying applicable conditions, using relevant valuations, showing decision makers the value in using secondary data, and presenting decision makers assessment data in comparable units and relatable language.
The analysis of CBA guidelines and case studies of Scandinavian appraisal reports will reveal current coverage of these four tenets and identify gaps. The aim of this approach is to lay the foundations for tailored CBA guidelines to fit demands for less time-and cost-consuming data sourcing and ease monetary valuation without high dependency on expert insights.
The analysis of major CBA guidelines from national, regional and global disbursement sources such as governments and financing institutions are assessed against their alignment with the total economic value framework. We also focus on the Scandinavian CBA guidelines, to assess against the multinational guideline standards and if they meet project managers' expressed need for time efficient, cost efficient and non-dependence on experts to execute CBA. Case studies of Scandinavian water sector project reports underpinned by the analysed Scandinavian CBA guidelines are investigated to explore differences between monetary valued project impacts in guidelines and in practice.

RESULTS
CBA guidelines correctly identify that the range of projects utilising the guideline are too varied to provide specific valuation instructions and data source recommendations.
End users argue that guidelines lacking accessible and Results from analysis of CBA guidelines   Göteborg and Lidköpings municipality).

Valuation methods identified by guidelines
Several common theories held by all the CBA guidelines are mentioned earlier in this paper. In contrast, this paper also provides the opportunity to collate the monetary valuation methods that are heavily underutilised by the case study appraisals in practice. This section highlights those methods, and provides a platform to discuss the need to develop their applicability to water sector typologies to a greater degree.

DISCUSSION
Illustrating the gap between CBA potential and case study practice rates  | Total economic valuation tree, adopted from Barbier (1989), combined with findings from rate of use of monetary valuation methods in Scandinavian appraisals of water infrastructure projects as listed in

CONCLUSION
The current use of CBA is in many ways defined by the application of CBA guidelines in project appraisals that project owners submit to win disbursements. The development of these guidelines by disbursement sources such as finan- tion and CBA is not the only way to impact assess water infrastructure projects, this paper suggests developing the CBA to a more applicable and accessible decision support tool as the CBA and its incorporated total economic valuation provides an optimal framework to communicate impact in monetary units to decision makers.

DATA AVAILABILITY STATEMENT
All relevant data are included in the paper or its Supplementary Information.