If benefit estimation is based on impact evaluation...

Impact evaluation of previous projects are sometimes helpful when selecting alternatives, establishing causality and attribution, and to calibrate expectations of impacts expected from the project. If used, monetary values are placed, under reasonable assumptions, on the estimated – or expected – impact of the project. This impact is derived using one of the methods – experimental, non- experimental, before and after and simple difference. These impacts are then expressed in monetary terms.

Most impact evaluations focus on very few (usually one or two) impact indicators and, as a result the chosen outcome measure may not reflect the full set of impacts nor the corresponding benefits. Along with the impact indicators, other potential project benefits should be incorporated as well as benefits that accrue to non-participants.

In the cases where impact evaluations report significant spillover effects on non-participants, an assessment has to be made on whether spillovers would take place when programs are scaled up, and whether the benefits attributed to these spillovers should be included or not. The use of impact evaluations is more useful in sectors, such as health and education, where there is ample evidence derived from impact evaluations, and relevant literature that connects the outcome measures with future benefits.