1. Introduction
Cost-benefit analysis CBA has emerged in the past three decades as the method of choice
for evaluation of development projects in devel- oping regions Kirkpatrick and Weiss, 1996.
Despite its popularity, however, CBA is the target of considerable reformation see, for ex-
ample, Jenkins, 1997 and criticism see, for ex- ample, Schwartzman, 1986. The purpose of this
paper is to suggest and provide a brief example of what I have dubbed employment-based anal-
ysis EBA as a complementary or alternative methodology for project evaluation in develop-
ing countries.
In contrast to the CBA approach of measur- ing a discounted stream of net incomebenefits,
EBA evaluates economic activity on the basis of the amount of employment generated or popula-
tion supported by each project, activity, or de- velopment path over a period of time using a
given amount of underlying resources. While employment has been long a concern in devel-
oping regions Todaro, 1994; Goodstein, 1999, and there has been some limited analysis of em-
ployment in developing regions, CBA continues to be the dominant method of project evalua-
tion, and net income continues to be the cur- rency by which projects are appraised. While
EBA clearly captures employment effects more directly than does CBA, the main argument for
promoting its widespread use is that it also bet- ter incorporates sustainability into project evalu-
ation. EBA is particularly illuminating when used to analyze sustainable development in the
context of environmental preservation projects in developing regions.
The next section introduces EBA methodol- ogy. Section 3 briefly discusses both EBA and
CBA in terms of accounting for sustainability, and explains the motivation, most illuminating
contexts, and drawbacks of EBA.
1
Section 4 provides an application of EBA to alternative
economic activities in Yucata´n, Mexico. Section 5 offers conclusions and suggestions for future
research.
2. EBA methodology
The basic notion of EBA is to count the number of jobs an economic activity provides,
or how many people families it supports, o6er a gi6en period of time, over a given resource
typically land. Like CBA, EBA can be quanti- tative, qualitative, or a mixture of both types of
analysis, depending on the needs of the policy- maker and time, resources, and data available.
For example, EBA could consist of job-based measures denominated in ‘job years per 1000 ha’
or ‘jobs per quarter century per ha,’ or if data were more limited, a qualitative discussion that
examines the employmentpopulation support needs and provisions of a given region under
alternative projects or activities.
In the case of quantitative analysis, the objec- tive of EBA is to provide numerical measures of
sustainable employment. What constitutes ‘em- ployment’ and a full-time ‘job’ would be defined
by local standards. A ‘job year’ represents em- ployment for one person for 1 year; measuring
economic activity using job years would consist of totaling the number of job years provided by
the activity or path over a certain period of time such as 25 years, over a given measure of
land. So, for example, EBA in this context might involve comparing the number of people
who can work 1000 ha of land doing alternative economic activities such as cattle-raising, subsis-
tence agricultural, traditional timber harvesting, or low-impact timber harvesting, over a period
of 25 years. Some activities might have many jobs in the first part of the 25-year period and
then provide less employment in the latter part of the period; other activities might provide
fewer jobs, but be a source of more sustain- able
employment and
thus result
in a
1
This discussion is necessarily limited. Entire texts are dedi- cated to esoteric concerns regarding CBA and welfare econom-
ics. Similar discussions, unfortunately, are beyond the scope of this article; hopefully such texts will be eventually written
about EBA.
higher overall number of job years. If a given project involves combinations of activities, the job
years for each activity could be calculated, then summed over the entire area and life of the project.
An important feature of EBA is that as certain activities give way to other activities over time e.g.
cattle raising shifts to goat raising, as pasture becomes poorer, job years would be calculated for
each expected activity over the chosen time period.
A broader, but still quantitative, approach would be to compare economic activities andor develop-
ment projects in terms of population support, i.e. the number of people supported by the activity on
a given measure of land or other capital investment. Accounting would be similar to job-years, but
instead of only analyzing workers involved in the given activity, this measure would also incorporate
the workers’ families. This approach recognizes the complexity of household economic organization in
developing regions and helps overcome the associ- ated measuring difficulty often encountered in
project analysis in such regions. In fact, while the discussion in this section is in terms of ‘jobs’ largely
for ease of exposition, the application in Section 4 is in terms of population support.
The choice of time period should reflect the tension between the incorporation of sustainability
and uncertainty. A longer time period incorporates greater consideration of sustainability, but is also
more subject to mismeasurement arising from in- creased uncertainty surrounding economic and
non-economic events over the time period; the reverse holds true for shorter periods. Uncertainty
in CBA is usually recognized via sensitivity analysis
2
Boardman et al., 1996; a similar ap- proach could be adopted as a component of EBA.
3. Sustainability, CBA and EBA
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