Full text: Study week on the econometric approach to development planning

This form, which emphasizes the lack of parallelism be- 
tween design choices and operating policy choices, has empirical 
advantages. The major one is that it poses the problem in a 
manner that technicians find manageable. It asks, « If you had 
a structure with specification x, ... x,, how would you operate 
it and what would the resultant outputs be? ». 
This basic formulation has to be modified clearly to fit 
the particular circumstances of particular projects. For roads, 
for example, achievement of objectives depends directly on 
structural characteristics (lane width, maximum grade, etc.) 
as well as on operating policy (speed and weight limits, level 
of maintenance, etc.). For reservoirs, structural characteristics 
will set limits to simple functions of the operating parameters 
as well as to the parameters themselves. In all these variants, 
however, the logical structure of the model will remain the 
The final approach that econometrics suggests to the 
problem of handling non-comparable benefits is closely related 
to the second. Instead of meeting specified targets at minimum 
cost, one can pose the problem of maximizing performance 
with respect to some one objective, subject to meeting targets 
with respect to the other dimensions of performance. In this 
approach the most likely objective to choose for maximization 
is the discounted present value of the net benefits that have 
convenient monetary equivalents. Construction cost is likely 
to enter as one of the constraining targets. 
The sacrifice of symmetry in the treatment of objectives is 
probably more apparent than real, and this approach has some 
compensating advantages. One advantage is that it reduces by 
one the number of target outputs that have to be specified in 
advance of serious analysis. The need to specify a maximum 
Dorfman - pag. 13

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