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THE ECONOMIST’S ROLE

THE ECONOMIST’S ROLE. Ken Claseman Senior Policy Advisor for Economics Office of Water Project Review HQUSACE kenneth.g.claseman@usace.army.mil. OBJECTIVES THE STUDENT WILL KNOW:. WHAT ECONOMISTS DO WHAT THEY NEED TO PERFORM THEIR FUNCTIONS HOW THEY SHOULD PERFORM THEIR FUNCTIONS.

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THE ECONOMIST’S ROLE

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  1. THE ECONOMIST’S ROLE Ken Claseman Senior Policy Advisor for Economics Office of Water Project Review HQUSACE kenneth.g.claseman@usace.army.mil

  2. OBJECTIVESTHE STUDENT WILL KNOW: • WHAT ECONOMISTS DO • WHAT THEY NEED TO PERFORM THEIR FUNCTIONS • HOW THEY SHOULD PERFORM THEIR FUNCTIONS

  3. WHAT ECONOMISTS DO • INFORM DECISIONMAKING • COMMUNICATE VALUE • PARTICIPATE ON TEAMS • REPRESENT THE AGENCY

  4. THE ECONOMIST’S WORLD • Demand/Supply • Willingness-to-Pay • Scarcity • Opportunity Costs • Decisions at the Margin

  5. ECONOMICS IN THE USACE • Determines project justification • Helps identify the best Federal Investment • Consistent with economic theory • Integrated with the planning process • Guidance is highly developed • Principles and Guidelines • ER 1105-2-100 • Economic Guidance Memorandums • Administration Policies affect the scope of Economic Analyses and Formulation

  6. Inventories using sampling / surveys Identify and Quantify Economic Variables Forecasts Of Future Conditions Economic Analysis of Alternatives NED Benefits Develop Economic Costs Estimate B/C Ratios & Net Benefits Cost Effectiveness/Incremental Cost Analyses Trade-off Analysis RED and OSE Empirical Evidence is Essential SPECIFIC ACTIVITIES

  7. Appraiser Survey Specialist Data Processor Statistician Financial Analyst Communicator SO THE ECONOMIST MUST BE AN...

  8. BUT CAN ECONOMISTS DO IT ALONE? NO!

  9. LAND USE PLANS PROBABILITIES DISCHARGE STAGES TRAFFIC FORECASTS CHANNEL DIMENSIONS COSTS RESTORATION OUTPUT ECONOMISTS REQUIRE INPUTS AND INTERACTION

  10. WHERE DO WE GET THE INFO? • Other Team Members • Other Governmental Agencies • MSCs - HQUSACE – IWR • Communities of Practice • Centers of Expertise • Outside Experts • Surveys and Databases

  11. THE STUDY TEAM • TODAY’S COMPLEXITIES REQUIRE TEAM SOLUTIONS. • ALL OF US ARE SMARTER THAN ANY ONE OF US.

  12. HOW SHOULD WE DO IT? • Follow the Guidance • Time and Budget Constraints • Objectivity / Avoiding Bias • Documentation

  13. 6 STEP PLANNING PROCESS Step 1 - Specify Problems and Opportunities Step 2 - Inventory and Forecast Conditions Step 3 - Formulate Alternative Plans Step 4 - Evaluate Effects of Alternative Plans Step 5 - Compare Alternative Plans Step 6 - Select Recommended Plan

  14. STEP 1: CONCEPTS • Problems, Opportunities and Constraints • Economists actively participate in defining problems, opportunities and constraints. • Goals and Objectives • Economists use goals and objectives for evaluation.

  15. STEP 2: INVENTORYAND FORECAST • Data collection • Related to problems, opportunities and objectives • Define historic and existing conditions • Forecast • Existing Condition • Future Without Project Condition • Future With Project Conditions

  16. STEP 3: ALTERNATIVE PLANS • Management Measures • Alternatives • Programs Economists must participate in formulation process, understand performance of measures to estimate economic impacts.

  17. STEP 4: EVALUATION • Quantify and Describe Effects & Impacts • National Economic • Environmental, including ecological and cultural • Regional Economic • Social • Four Evaluation Criteria: Efficiency, Effectiveness, Completeness, Acceptability • Other Criteria – RED/OSE • Future With Project Conditions

  18. STEP 5: COMPARISON • Compare all viable plans • Describe differences • Contributions to objectives • P&G Evaluation Criteria • Other criteria of importance • Describe trade-offs • Systematic trade-off analysis might be required.

  19. STEP 6: SELECTION • No Action • NED Plan • NER Plan • Locally Preferred Plan • Combined NED/NER Plan Economists provide primary input for decision making IS IT WORTH IT ?

  20. OTHER THINGS ECONOMISTS DO • Input to PMPs • Financial Analysis • Life Cycle Cost Studies • Economic Updates • Economic Analysis for: • DMMPs • Dam Safety • Military Projects • Budgetary Support

  21. KEY TAKE AWAYS • Economists communicate value. • Economists help identify best Federal investment. • Empirical evidence is essential. • Economists are important members of Project Delivery Teams. • Economists play a significant role throughout the planning process. IS IT WORTH IT???

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