Leader Observatory Seminar The Legacy of Leader at local level: Building the future of rural areas 2

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Leader Observatory Seminar The Legacy of
Leader at local levelBuilding the future of
rural areas24-26 April 2007 - Cap Corse, Nebbiù
è Custera, Corse, France

• Mini-plenary C Ensuring Economic Viability
• Ivo Tartaglia, GAL Vastese Inn., Italy

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ORGANIZATION OF THE SESSION

• Introduction of participants 10
• What does economic viability means for Leader
  A duster and some other tools
  5
• Case Study 1 - Austria 10
• Case Studies 23 Northern Isles (Scotland)
  10
• Discussion 30
• Recap conclusions and key-words
  5-10
• Comments of participants to proposed synthesis
  5-10

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WHAT DOES ECONOMIC VIABILITY MEAN?

• Assumptions Definitions
• For a project to be economically viable, it must
  be financially sustainable and economically
  efficient
• An economically viable project provides the best
  choice for the LAG area in terms of overall
  benefits and costs
• The local development plan provides the best
  choice for the LAG area in terms of a mix of
  most economically viable projects
• Economic viability depends strongly upon the
  sustainability of plan or project effects
  (financial, environmental, social, ) including
  added value innovation content.
• How to measure it?
• Simply measuring employment created, volume of
  sales, etc.?
• Calculating ENPV and EIRR?
• Others?

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PERSPECTIVE OF PROJECT ECONOMIC ANALYSIS

• Private
  LAG Area

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STEPS OF ECONOMIC ANALYSIS

• The procedure for undertaking economic analysis
  to test/verify viability follows a sequence of
  interrelated steps
• define project objectives and economic rationale
• forecast effective demand for project outputs
• choose the least-cost design for meeting demand
  or the most cost-effective way of achieving
  project objectives
• determine whether economic benefits exceed
  economic costs
• assess whether project net benefits will be
  sustainable throughout project life
• test for risks associated with project
• identify project distributional and multiplier
  effects and
• enumerate project non-quantifiable effects that
  may influence project design, investment or
  funding decisions

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THE KEY TOPICS FOR LEADER

•    Has Leader funded economically viable
  projects?
• do project generate an income for covering
  project costs if yes, how?
• will project continue after ending of Leader
  funding if yes, how?
• is project an impulse for other economically
  viable activities if yes, how?
• do the projects create the conditions/environment
  for economically viable activities if yes, what
  sorts of conditions/environment?
• does economic viability prioritise the project in
  the selection process if so, how?

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THE KEY TOPICS FOR LEADER (cont.)

• How to ensure that selected projects will be
  economically viable?
• What is the success in terms of economic
  viability of a project?
• Generating the income that covers part or all
  projects costs
• Generating net income
• Securing long-term promoters and other actors
• Widening the baseline
• Triggering chain-reaction patterns, replication
  effects etc.
• What are the tools for assessing economic
  viability?
• Using CB analysis, EIRR and ENPV
• Sensitivity and Risk analysis
• Consistent sets of indicators indices (tools
  to support knowledge, comparison and
  communication)

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THE KEY TOPICS FOR LEADER (cont.)

• What are the requirements for proving the
  economic viability before, during and after
  funding?
• BEFORE knowledge of baseline conditions,
  feasibility studies, impact analysis (including
  EIA, SEA) etc.
• DURING monitoring of intermediate results vs
  targets and strategies
• AFTER evaluation of outputs, results, impacts,
  sustainability
• Ex-post evaluation is crucial for
• Comparing real scenarios against forecasted ones
• Improving quality of feasibility analysis,
  simulations ... policies and programmes

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CASE STUDIES

• Austria - Almenland, Gerald Gigler and Franz
  Kneissl
• Case study 1 Economic viability of LAG
  Almenland
• Theme Adding value to local products
• Scotland - Northern Isles, Alec Miller
• Case study 1 Community Portal in the Orkney
  Islands
• Case study 2 PURE project
• Theme Use of new know-how and new technologies

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DISCUSSION

• What are the lessons learned for the future about
  economic viability of projects?
• What are the crucial points for economic
  viability of projects?
• What is transferable to my LAG?
• Which are the innovative approaches applicable in
  my LAG?

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ONE FINAL NOTE ON MEASUREMENTTHE SHANGHAI GAME

• Indicators, indicators, indicators
• Play the Shanghai game
• Select and handle a set number of sticks - one by
  one, with attention and care
• Count colours and get the final score!

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IN A COMPLEX GAME

• To assess economic viability is a complex game
  with many components
• Promoters and other stakeholders
• Strategies and targets
• Revenues/costs ltgt Benefits/external costs
• Human resources
• Environment other baseline conditions
• Time-frame
• Sectoral interdependence (Input-Output)
• Exit-strategies
• ? Clustering might be one key word

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CLUSTERING MOVING FROM AN ECONOMICALLY VIABLE
PROJECT TO AN ECONOMICALLY VIABLE PLAN
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FROM CLUSTERING TOA PROCESS-BASED PLAN

• single project
• multiple projects
• interrelated projects
• integrated projects