Hi, I’m Seth Tucker, an Evaluation Analyst at TCC Group.
Output/outcome valuation transforms project outputs and outcomes into a common unit (currency) that can help objectively determine the worth of a project, instead of relying solely on subjective opinion. For example, how much would you pay to protect a sea turtle? Each reader likely has a different answer. While subjective valuation like this is important, relying solely on it can undervalue the worth of a project and make it more difficult to attract funding and support to a project.
Let’s consider this scenario: envision being the project coordinator for a seagrass restoration project aiming to raise $500,000 USD. Despite emphasizing outputs and outcomes like increased seagrass leading to a higher sea turtle population and increased CO2 capture, funders value these outcomes less than $500,000, hindering the fundraising goal.
To persuade funders of the project’s worth, we could first articulate the different social and environmental values generated by the project’s outputs and outcomes. These include direct values, like seagrass use by local communities for art, as well as indirect values, such as seagrass acting as a natural barrier against coastal erosion or providing habitat for fish that local populations rely on for food. Seagrass also holds option values, like potential future uses for medicinal discoveries or recreation. In addition, there are bequest values, which are the value of the benefits others will gain from seagrass in the future, and existence values, which represent the personal value individuals place on seagrass simply for existing.
Next, we can consider the monetary valuation that these different values have. For instance, the market price of fish can show how much more a community would incur buying fish from an outside market instead of fishing locally. The replacement cost could show how much it would cost to build an equivalent human-made system for coastal erosion protection. The cost of avoided damage could measure the economic impact of preventing coastal erosion through seagrass restoration. And contingent valuation could involve surveying community members about how much they would pay to preserve seagrass and the fish population. Adding these values together provides the total economic value of the project. By presenting the total economic value attached to the project outputs and outcomes, we can better make an argument to funders that the project is worth $500,000, and will have a greater social and environmental return than the initial investment.
Lessons Learned
It is important to focus on the outputs and outcomes that are most realistic to value given resources, staff, and timeline, as well as understand which values are most likely to convince funders to invest. In our seagrass project, to convince government actors who have limited funds it may be most appropriate to use the cost of avoided damage to show that if they invest $500,000 now, they will not have to invest much more in the future to mitigate damage from increased coastal erosion. Or if we are speaking with funders more interested in social outcomes, it may be most appropriate to use the market price valuation to demonstrate how much families would save in food costs by fishing from a sustainable fish population instead of shopping in markets for the fish.
Rad Resources
- Environmental/ecosystem valuation methods: Dollar-based Ecosystem Valuation Methods
- Database of reports related to environmental/ecosystem valuation: Ecosystem Services Valuation Database (ESVD)
- Social impact valuation methods found in the Social Return on Investment Guide
- Database of reports using social impact valuation: Social Value UK Reports Database
The American Evaluation Association is hosting Social Impact Measurement TIG Week with our colleagues in the Social Impact Measurement Topical Interest Group. The contributions all this week to AEA365 come from our SIM TIG members. Do you have questions, concerns, kudos, or content to extend this AEA365 contribution? Please add them in the comments section for this post on the AEA365 webpage so that we may enrich our community of practice. Would you like to submit an AEA365 Tip? Please send a note of interest to AEA365@eval.org. AEA365 is sponsored by the American Evaluation Association and provides a Tip-a-Day by and for evaluators. The views and opinions expressed on the AEA365 blog are solely those of the original authors and other contributors. These views and opinions do not necessarily represent those of the American Evaluation Association, and/or any/all contributors to this site.