The Economic Performance of Public Investments: An Ex Post Evaluation of Water Resources Investments

The Economic Performance of Public Investments: An Ex Post Evaluation of Water Resources Investments

The Economic Performance of Public Investments: An Ex Post Evaluation of Water Resources Investments

The Economic Performance of Public Investments: An Ex Post Evaluation of Water Resources Investments

Excerpt

As the role of the public sector in the United States economy expands relative to the private sector, it is essential that the tools of economic analysis and planning be applied to decisions in this sector. This necessity has been increasingly recognized since the techniques of benefit-cost analysis and cost effectiveness analysis have been developed. The federal government and state and local governments have established planning, programming, and budgeting systems to encourage the application of such analysis to proposed public actions. As a result, the economic effects of government programs are now more fully understood, and the necessity to initiate changes to increase the effectiveness of the public sector is more clearly perceived.

Nevertheless, the impact of analysis and evaluation on the quality of public decisions and the effectiveness of government performance has been small. Inefficient and inequitable public programs, apparently immune to evaluation or criticism, continue to thrive. Policy analysis and recommendations based on efficiency criteria are weak instruments with which to counteract vested power possessed by organized private interests receiving public subsidies, executive agencies administering programs, or legislative blocs "overseeing" government activities. If government is to perform in the public interest, incentives in the political system that favor such inefficiency and inequality must be altered.

Simultaneously with such political reform, however, it is necessary that the tools of policy analysis and planning continue to be developed and applied to public programs. While major progress has been made in applying efficiency and equity analysis to proposed public investment decisions, there has been little effort to evaluate the results of past policy actions. As a consequence, little is known of the accuracy of ex ante analytical techniques as applied by government agencies. Improvement in procedures for applying these techniques has not benefited from the feedback made possible by evaluating the performance of past projects.

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