Project: Cost-Benefit Analysis of Natural Resource Management

In support of the Malawi Priorities project – Natural Resource Management CBA, the Limestone Analytics research team investigated two development questions:

  • How can national resources best contribute to wealth creation?
  • What institutional structures best deliver the returns on investment in national resource management?

Given the significance of natural resources for wealth creation in Malawi, the research team first defined national resources. The Limestone team then conducted a comprehensive literature review of the mining and fisheries/aquaculture sectors and a series of stakeholder interviews to identify the most relevant challenges. The team conducted a cost-benefit analysis (CBA) to measure the potential impact of two possible interventions:

  • Mining landing centers for artisanal, small-scale mining operations (ASM)
  • Chipoka Port Fisheries and Aquaculture Infrastructure and Land Development Program

Limestone prepared a detailed technical report containing the literature review, applied methodology, CBA findings, and policy recommendations. The team also summarized the analysis and CBA findings in an accompanying policy briefing note for Malawian policymakers.

The CBA results show that both interventions have benefit-cost ratios (BCRs) in the range of 1-5, meaning that the net benefits outweigh the net costs of each intervention. This suggests that both interventions are likely to generate positive results while remaining cost-effective.

  • ASM landing stations and the international marketing center present an outstanding potential for Malawi’s mining sector. It is likely for the intervention to lead to the discovery, extraction, and marketing of a considerable amount of gold, gemstones, and other minerals. 
  • The Chipoka fisheries and aquaculture investment project could turn into a national hub for industrial, commercial, and logistical activities and generate a significant multiplier effect on the key related sectors of agriculture, tourism, and transportation. 
Interventions’ Benefit-Cost Ratios at Alternative Discount Rates

Clients / Partners

Timeline

December

2020

Research Plan Literature review, intervention selection, and methodology
March - April

2021

CBA Model and Technical Reports Spreadsheet with accompanying report detailing the CBA methodology
April - May

2021

Final Report Complete overview of literature, intervention selection, CBA methodology and policy recommendations