Mandatory Cost-Benefit Analysis: No Panacea

Imagine you have recently been named a project manager for a World Bank good governance program in Nicaragua. Your task: build a more transparent and efficient judiciary. You’ve been granted a great deal of latitude in how you allocate your resources. Recently, the Independent Evaluation Group (IEG) released a splash-making report on Cost-Benefit Analyses (CBAs) in World Bank projects. You read it and understand its straightforward message: conduct CBAs whenever possible. Do you go out of your way to please IEG, or is there a better use of your time and money?

On Tuesday May 31st CGP attended an event hosted by the Center for Global Development and SAIS that discussed precisely this question.  Sadly, Andrew Warner, the author of the aforementioned IEG paper (“Cost-Benefit Analysis in World Bank Projects”), was a no-show. In his absence, Alan Gelb, a senior fellow at CGD, led the audience through a review of the paper and its implications. The paper and discussion emphasized CBAs as a tool of accountability. It seemed to us, however, that training managers and staff to be better at accountability analysis is a simpler way to improve performance in WB projects than making CBAs compulsory. Continue reading