Advancing the impact identification step of benefit-cost analysis of potable water infrastructure investments: A systems method for identifying important impacts pre-monetisation

Abstract

Benefit cost analysis (BCA) is frequently used to evaluate potable water infrastructure (PWI) investments. However, a limitation raised by BCA researchers is the narrow view of analysts in identifying investment impacts. In this paper, we propose a systems-thinking framework, supported by data from the literature, interviews, and macroeconomic data, to provide analysts with a more systematic and comprehensive view of investment impacts. The framework, once built, can be applied to any PWI investment question, to identify the prominent impacts that an analyst should consider taking forward through the quantification stages of the BCA process. We validate our method for identifying impacts using data from New Zealand. Our method identifies impacts that are typically not valued in BCA of PWI investments, but that are a common impact of many types of PWI investment decision. Household costs, for example, score in the Top 10 investment outcomes, but are only typically valued in ex post analyses of outbreaks. These impacts warrant attention in future benefit cost analyses. An additional contribution is the development a new betweenness importance rating, which we call flow betweenness, to evaluate each impact's prominence within the PWI socio-economic system.

Keywords: Benefit cost analysis; Infrastructure investment impacts; Potable water infrastructure; Systems-thinking.