nep-ppm New Economics Papers
on Project, Program and Portfolio Management
Issue of 2021‒03‒22
seven papers chosen by
Arvi Kuura
Tartu Ülikool

  1. A new approach for evaluation of the economic impact of decentralized electrification projects By Jean-Claude Berthélemy; Mathilde Maurel
  2. Government financing of R&D: a mechanism design approach By Lach, Saul; Neeman, Zvika; Schankerman, Mark
  3. Opening the Black Box: Disbursement Delays Impacts on Growth in Asian Development Bank Loan Projects in Indonesia By Muhammad A Ingratubun; Akhmad Fauzi
  4. Differentiated green loans By Louis-Gaëtan Giraudet; Anna Petronevich; Laurent Faucheux
  5. Open innovation deficiency: Evidence on project abandonment and delay By van Criekingen, Kristof; Freel, Mark; Czarnitzki, Dirk
  6. Monitoring, evaluation and learning for climate risk management By Martin Noltze; Alexandra Köngeter; Cornelia Römling; Dirk Hoffmann
  7. Dam Safety in India. By Damle, Devendra

  1. By: Jean-Claude Berthélemy (UP1 - Université Paris 1 Panthéon-Sorbonne, FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Mathilde Maurel (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: This paper proposes a new methodology for evaluating off-grid electrification projects, based upon Nighttime Light (NTL) observations, obtained by a combination of Defense Meteorological Satellite Program (DMSP) data and Visible Infrared Imaging Radiometer Suite (VIIRS) data. The methodology consists of comparing NTL data before and after the implementation of the projects. The projects are selected from FERDI's Collaborative Smart Mapping of Mini-grid Action (CoSMMA) analysis, which documents existing project evaluations reported in published papers. Such reported evaluations are of uneven quality, with few evaluations which meet scientific standards. Our results suggest that our new methodology can contribute to fill this gap. For each project, we compute the NTL deviation with respect to its counterfactual, which provides us a proxy for the off-grid electricity-induced rate of NTL growth.
    Keywords: Decentralized electrification,sustainable development,impact assessment,Nighttime Light,DMSP,VIIRS
    Date: 2021–03–02
  2. By: Lach, Saul; Neeman, Zvika; Schankerman, Mark
    Abstract: We study how to design an optimal government loan program for risky R&D projects with positive externalities. With adverse selection, the optimal government contract involves a high interest rate but nearly zero co-financing by the entrepreneur. This contrasts sharply with observed loan schemes. With adverse selection and moral hazard, allowing for two levels of effort by the entrepreneur, the optimal policy consists of a menu of at most two contracts, one with high interest and zero self-financing, and a second with a lower interest plus co-financing. Calibrated simulations assess welfare gains from the optimal policy, observed loan programs, and a direct subsidy to private venture capital firms. The gains vary with the size of the externalities, cost of public funds, and effectiveness of the private VC industry.
    Keywords: Mechanism design; Innovation; R&D; Entrepreneurship; Additionality; Government finance; Venture capital
    JEL: E6 F3 G3
    Date: 2020–08–03
  3. By: Muhammad A Ingratubun (Agricultural University, Indonesia); Akhmad Fauzi (Agricultural University, Indonesia)
    Abstract: Compared with commercial banks that take one day, Asian Development Bank (ADB) loans take over 5-year before they are fully disbursed after the borrower signed the loan agreements, because of conditionalities. During which, the funds stay in the banks and gain compounded interest disfavoring Indonesia and affect its economic growth. Development aid studies have mostly overlooked these gains, and their impacts. We reviewed the financial costs of delays during project implementation in Indonesia and their impacts on GDP growth involving 325 ADB's loan projects with over 1,100 sub-loans, from 1969 to 2017 totaled over $33 billion. We applied a non-econometric, and quantitative attribution methodology, adopting project and portfolio management principles. The results show that 'if disbursed 100% in year-1', the ADB loans help Indonesia stabilizing growth at 6% per annum until they are at 1%-GDP. Because of disbursement delays, this is shortened by half with 60% volatility and declining at 0.42%-GDP (average ADB loans) due to ADB's standard implementation of 5-year and with 2-year delays (7-year). Growth sharply decays at 0.5%-GDP and reaches zero as ADB loans increase to 0.81%-GDP. Indonesia suffers a capital loss of $0.5 - $12 per $1 loan because of disbursement delays under today's prevalent banking practices. Accounting for these losses, ADB loans have severe negative impacts as growth suffers over 200% volatility because of disbursement delays. Fixing this is simple but requires a fundamental change.
    Keywords: Disbursement delays, growth, money creation, negative impact, volatility, bank
    Date: 2021–01
  4. By: Louis-Gaëtan Giraudet (ENPC - École des Ponts ParisTech, CIRED - Centre International de Recherche sur l'Environnement et le Développement - Université Paris-Saclay - AgroParisTech - EHESS - École des hautes études en sciences sociales - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Anna Petronevich (Banque de France - Banque de France - Banque de France); Laurent Faucheux (CIRED - Centre International de Recherche sur l'Environnement et le Développement - Université Paris-Saclay - AgroParisTech - EHESS - École des hautes études en sciences sociales - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Scaling up home energy retrofits requires that associated loans be priced efficiently. Using a unique dataset of posted loan prices scraped from online simulators made available by French credit institutions, we examine the differentiation of interest rates in relation to project risk. Crucially, our data are immune from sorting bias based on borrower characteristics. We find that greener, arguably less risky, automobile projects carry lower interest rates, but greener home retrofits do not. On the other hand, conventional automobiles carry lower interest rates than do conventional home retrofits, despite arguably similar risk. Our results are robust to a range of robustness checks, including placebo tests. They together suggest that lenders use underlying assets to screen borrower's unobserved willingness to pay, which can cause under-investment in home energy retrofits. We thereby point to a new form of the energy efficiency gap. This has important policy implications in that it can explain low uptake of zero-interest green loan programs.
    Keywords: personal loan,home energy retrofit,screening,data scraping,online prices,energy efficiency gap
    Date: 2021–02
  5. By: van Criekingen, Kristof; Freel, Mark; Czarnitzki, Dirk
    Abstract: The concept of Open Innovation (OI) has breathed new life into both empirical research and industry practice concerned with distributed and collaborative modes of innovating. Certainly, the volume of OI research and its impact on practice has been remarkable. However, equally remarkable is the lack of balance. With few exceptions, the stories of OI are positive stories. A unbalanced focus on successes leads to open innovation imperatives and the conclusion that, for most firms, openness is good, and more openness is better. In this paper, we nuance this perception by empirically investigating the relationships between innovation openness and its effects on project abandonment and delays. Using survey data from Belgium, we find that open innovation strongly associates with an increased risk of both project abandonment and project delays.
    Keywords: Open innovation,collaboration,project abandonment
    JEL: O31
    Date: 2021
  6. By: Martin Noltze; Alexandra Köngeter; Cornelia Römling; Dirk Hoffmann
    Abstract: This working paper focuses on the role of monitoring, evaluation and learning (MEL) for promoting effective climate risk management. It aims to introduce a conceptual framework that governments and development co-operation providers can draw on when developing MEL frameworks for their interventions on climate risk management. The paper also presents existing methods and tools to address the technical challenges to developing such MEL frameworks. Further, it provides examples of good practice for adjusting or updating existing MEL frameworks in support of climate risk management. It contributes to the project Strengthening Climate Resilience: Guidance for Governments and Development Co-operation of the Organisation for Economic Co-operation and Development (OECD).
    Keywords: climate change, climate resilience, climate risk management, development co-operation, Monitoring and evaluation, monitoring, evaluation and learning
    JEL: O19 O44 O13 Q56 Q54
    Date: 2021–03–18
  7. By: Damle, Devendra (National Institute of Public Finance and Policy)
    Abstract: India has 5334 large dams; the largest number of dams in the world after USA and China. This number is set to increase in the coming years as India constructs more dams to meet the rising demand for electricity and water. Constructing dams exposes downstream areas to the risk of catastrophic flooding - in the event the dam fails or water has to be released in an emergency. Adopting risk-based decision-making systems for making policy, implementation and management decisions regarding dams are crucial for mitigating this risk. Conducting dam break analyses is a basic requirement for crreating such a system. In the existing regulatory system, clearance for constructing new dams requires the builder to conduct a dam break analysis. However, there is no standardisation in how the dam break analyses are conducted and reported. It is also unclear how many projects actually comply with this requirement. There is no statutory requirement for conducting a consequence analysis to estimate the likely loss of life and property, and economic damage in the event of dam failure. Existing design standards for dams are not based on the risk created by the dam, but rather on their heights and storage capacities. Further, there is no centralised system for documenting and reporting actual dam failures, which is another crucial component of dam risk mitigation. Putting in place systems for regularly conducting dam break analyses, regular reporting of dam failure events, and ready public availability of such data is a necessary precondition for the development of risk-based decision-making systems to mitigate risk from dams.
    Date: 2021–03

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