11 Jul 2019

Sustainable Development Goals pertain to the economics of promoting growth, while ensuring social inclusion, environmental protection, and improved governance. These goals are thought of as "wicked problems" that are too complex to be evaluated due to their vastness. However, a new method of evaluation may provide the solution.

UN Sustainable Development Goals poster

(Photo: UN Sustainable Development Goals)

Sustainable Development Goals

TheSustainable Development Goals (SDGs) are 17 global goals set by the United Nations General Assembly. They form a global action plan that aims to achieve a more sustainable future for all, by addressing issues such as poverty, inequality, environmental protection and peace, justice and strong institutions.

The SDGs were adopted in 2015 and the deadline for achieving them is 2030. Unfortunately, according to the latestUNESCAP SDG Progress Report, it appears that the Asia-Pacific region will likely miss all the goals by 2030. Southeast Asia in particular, is actually regressing in areas such as decent work and economic growth (Goal 8), climate action (Goal 13) and peace, justice and strong institutions (Goal 16).

In their new book Economic Evaluation of Sustainable Development, Visiting Professor Vinod Thomas and Assistant Professor Namrata Chindarkar of the Lee Kuan Yew School of Public Policy, National University of Singapore, explain that the SDGs are a starting point to expand the evaluative process from short-term goals to long-term welfare. More important than the individual goals is the significance of their interlinkages. Not only do the goals reinforce each other, they can also negatively affect one another.

Choosing the right methods of economic evaluation

As current evaluations tend to be partial and narrow in their focus, such as on short-term economic growth, they are likely to provide inadequate or misleading signals for the directions that should actually be taken, say Prof Thomas and Dr Chindarkar. The solution presented in the book is to use the following three approaches in evaluation, to gain a more comprehensive understanding of what needs to be done.

Impact Evaluation

Impact Evaluation (IE) aims to assess the extent of an impact that is due to a particular project or policy, such as providing vaccinations to the population or social protection to the low-income strata. As it can be used to establish causality, IE is essential in assessing the impact of steps taken to achieve the SDGs. This method is also flexible enough to be used for smaller-scale projects and also to evaluate much larger, national-level policies such as in the area of education.

Cost-Benefit Analysis

Cost-Benefit Analysis (CBA) essentially weighs the costs and benefits of an action by making projections and calculating the net benefit in terms of present value. While IE is used to measure how the intended individuals are better (or worse) off compared to without intervention, CBA considers the costs that have to be incurred to implement an action and whether the intended beneficiaries have benefited financially.

When it comes to sustainable development, many projects have intangible costs or benefits, which may be difficult to monetise. CBA allows for valuing such benefits in present-dollar terms. If a value can be placed on an intangible attribute, it allows policymakers to have a stronger basis for making a certain choice. For example, an improved rural water supply (Goal 6) could lead to an improvement in health (Goal 3).

Objectives-Based Evaluation

When it comes to achieving SDGs, overseas development assistance (ODA) is one of the main resources, whereby low-to-middle-income countries receive funds to invest in various sectors. As ODA is used for a wide range of purposes, there is an increasing need for the funds to be accountable and to be used for harmonised objectives so that resource-use is optimised.

OBE encourages both harmonisation and accountability by assessing achievements according to an established set of objectives. By measuring outcomes against initially stated objectives, clear objectives can be formed from the outset. This is important as outcomes can take a significant amount of time to become apparent after a project is completed.

For example, in the short term, a pipe-construction project's tangible output may be that collecting water becomes more convenient for beneficiary households. In the longer term, it may lead to improved health.

How then, can these evaluation tools be applied to the three tenets of reducing inequality, environmental protection and good governance?

Reducing inequality

One of the overarching aims of the SDGs is to reduce inequalites globally. Southeast Asia has seen a rise in inequality, which increases the need to adopt policies of inclusion. How can economic growth be pursued with greater inclusion of people in the process?

Generally, it is clear that an uneven distribution of skills and education perpetuates inequality. A widening income gap could create social tensions, and create instability, which would then deter investments. It also poses a problem to governments looking to find a consensus from the public to address economic issues.

OECD research indicates that a widening income gap causes low-income families to invest less in education and skills development. This in turn affects growth as it decreases the number of skilled workers available.

Additionally, rising inequality has less of an impact on people from middle-to-higher income backgrounds. For those from poorer backgrounds, increasing inequality means that they become less likely to graduate from university, and therefore gain employment.

Taking the evaluation tools into account, IE can be used to establish causality between access to education and increasing inequality. CBA can then be used to weigh the costs of creating greater access for lower income groups, versus the benefits they would gain from greater participation. For example, increased expenditure on education to reduce costs for low-income families will aid inclusion. Similarly, OBE can be used to show that investing in development increases investment profitability.

Environmental Protection

When it comes to environment protection, how can growth be sustained without worsening environmental degradation and climate change? Unfortunately, environmental protection still tends to be perceived as an obstacle to project efficiency.

The SDG Progress Report states that a quarter of the targets where regression has been observed are linked to natural resource management — which includes sustainable food production, management of chemicals and wastes, and the loss of biodiversity.

In this instance, OBE would be useful to show that focusing on sustainability can actually ensure project success. If project analysts were to routinely include statements of climate risks and impacts, for example, the dangers of climate change would be constantly brought to light and addressed.

CBA on the other hand, can be used to show what are the costs of not dealing with the environment. For example, large-scale destruction of primary forests due to the production of commodities such as palm oil may appear to have short term economic benefits, but ultimately will have a detrimental effect on the ecosystem and livelihood of local communities.

Lastly, IE can be used to assess climate mitigation efforts. For example, if an evaluation only focuses on changes in deforestation within a priority area without considering the negative spillovers in other areas, on the surface the results would suggest that deforestation rates have decreased. This might give the false impression that the programme’s objectives were achieved, despite the fact that there may be serious negative spillovers in other areas. IE therefore allows for a broader assessment of the effect of a programme.

Good governance

Without good governance, reforms to achieve the SDGs cannot be implemented successfully. Southeast Asia still sees high rates of corruption, which is a systemic barrier to achieving the goals. For example, an estimated 40% of investments in electricity, water and sanitation are lost due to corruption. How can institutions be strengthened so that economic performance can be enhanced without impeding other aspects of SDGs?

If OBE was used, it would clearly indicate that success rates of governance are below average, as objectives are not being followed. By adopting OBE, greater accountability could then be accorded to the use of funds, so that illicit financial flows can be curbed.

IE, in this instance, could help to determine where more efforts are required to enforce policies. In larger countries, for example, in order for a project or policy to be effective,enhanced vertical coherence is key, so that national governments can set the goals and local governments can ensure their implementation on the ground level.

In Vietnam, for example, the Ministry of Planning and Investment is the lead agency for SDGs, and engages with multiple layers of governance so that other ministries and related agencies are involved.

IE would therefore shift the focus from pace of growth, to quality and impact of growth.

If growth and well-being are to be pursued at the same time, evaluations need to look across sectors. This can make progress challenging to monitor and assess. Therefore, the evaluation tools mentioned here may help in adopting a long-term focus to achieve the SDGs, instead of focusing on short-term growth.

Read When evaluation makes a difference by Prof Vinod Thomas and Dr Namrata Chindarkar (The Business Times, 6 June 2019)

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