A number of European entities have been identified in section 2.1 as the primary source of funding for European public investments in space. For the individual entities, such as ESA or the EU, these investments typically consist of programmes which are combinations of projects. As the projects are more concrete and detailed than total investment for a programme, SCBA-plus analysis should start at the level of projects. This raises the question how the impacts of a whole programme, or all of a specific entity’s investments, or even all public investments in space at European level, may be evaluated. This section tries to provide an answer to this question.
From projects to programmes
First, we define projects as units within an investment programme which cannot be partially implemented without (almost) completely losing the benefits of the project. An example is building a launcher: in principle this may be split up into building separate stages, but the launcher can only be used if all stages are built. In other words, there is a strong interdependence between the different parts of a project.
Next we may consider an investment programme. Again, there is interdependence between the parts: in this case the different projects within the programme. This synergy is the reason why the
PROPOSED METHODOLOGY: SCBA-PLUS 61
projects have been put together in a programme. However, some projects may not be indispensible.
Assessing the impacts of programmes then consists of assessing the impacts of the projects within the programme, including the synergy between them. However, it may be very cumbersome and costly28 to do research into the effects of each of many projects within a programme. A practical approach is to analyse the most important projects, and then to extrapolate from there. For instance, if the investment programme is € 500 million in size, and five important projects within the programme with total investments of € 250 million have net social welfare benefits of € 400 million, we may compute a rough estimate of the social welfare benefits of the whole programme as (500/300)x400= € 800 million.
However, synergy between projects should be looked into separately. Taking again the example:
the estimate above implicitly assumes that the synergy between on the one hand the five projects and on the other hand the other projects is just as large as the synergy between the five projects, relative to the size of the impacts. If there are reasons to assume that the relative synergy may be different, this would call for a correction of the estimate.
From programmes to total investment
The next step is aggregation from investment programmes to total investments. Investment programmes are to a large extent separate units, otherwise they would have been combined into one programme. Therefore synergy effects may be relatively small in this aggregation step.
However, extrapolating from one programme to another is not advisable: building launchers is totally different from earth observation or basic R&D. For each type of programme, separate projects could be analysed and if necessary extrapolated to the programme level. Next, the effects of programmes can be added up, if necessary taking account of limited synergy between programmes.
Applying SCBA-plus to projects and programmes, over time ‘standard ratios’ will arise, for instance “€ 100 million of investment in R&D on average increases the number of jobs in the space sector permanently by 200”. As the body of knowledge grows, it will be better feasible to assess still more projects and programmes.
Aggregation: the SCBA- and the MCA-part
In section 5.2 we have already paid some attention to the issue of aggregation with respect to the SCBA- and the MCA-part of the SCBA-plus methodology. The end results of SCBA (net present values of welfare changes in money terms) are very well suited for evaluating one project, for comparing different projects, and for aggregating outcomes; see above. The end results of an MCA (summed, weighted scores of different criteria) by themselves are less well suited for aggregating outcomes. This is one of the reasons why it is preferable to assess as many effects as possible in the SCBA-part.
Here, we illustrate what aggregation could look like, building on the example tables of section 5.2.
First, we repeat the summary table 5.10 in the form of table 5.12.
28 In general, the costs of analysis should be only all small part of the costs of the investments analysed.
Table 5.12 Overall table: Monetized effects and scores/ratings (based on table 5.10)
Project A Project B
(Net) ‘present’ values, SCBA-part
Investment costs e.g. 10 bln euro e.g. 15 bln euro
Recurrent costs e.g. xa bln euro e.g. xb bln euro
Calculated effect 1 in money terms
e.g. +ya1 bln euro e.g. +yb1 bln euro
Calculated effect 2 in
money terms e.g. +ya2 bln euro e.g. +yb2 bln euro
etc. ... ...
NPV of effects minus costs
(NPV effects in money terms - investment costs – recurrent costs) =
e.g. ya1+ya2-10-xa etc.
(NPV effects in money terms - investment costs – recurrent costs) =
e.g. yb1+yb2-15-xb etc.
Scores, MCA-part Score on environment
(unweighted) 8.2 10
Score on innovation
(unweighted) 2.5 10
Score on competition
(unweighted) 4 7
Weighted total score 4.9 9.7
NPV: net present value
Let’s assume that the evaluation is about the aggregate effect of project A and B. For simplicity, assume that costs and effects of these projects are not interdependent. Summing up the SCBA-scores and calculating simple average SCBA-scores over the two projects would give table 5.13.
Table 5.13 Overall table: Monetized effects and scores/ratings, summed over two projects Project A plus B
(Net) ‘present’ values, SCBA-part
Investment costs e.g. 10 + 15 bln euro = 25 bln euro
Recurrent costs e.g. xa + xb bln euro
Calculated effect 1 in
money terms e.g. ya1 + yb1 bln euro Calculated effect 2 in
money terms e.g. ya2 + yb2 bln euro
etc. ...
NPV of effects minus costs
(NPV effects in money terms - investment costs – recurrent costs) = e.g.
ya1+yb1+ya2+ yb2-25-xa-xv etc.
Scores, MCA-part
Score on environment 9.1
Score on innovation 6.3
Score on competition 5.5
Weighted total score 7.3
NPV: net present value
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Notice that presenting both table 5.13 and table 5.12 would provide the most information for evaluation purposes. Notice too, that instead of calculating simple averages of MCA-scores, one could opt for weighted averages, for instance based on the size of the investments in the projects.
We have argued before that a summary table like table 5.12 should be complemented with the table in which effects are measured in their own terms. The same goes for a table with summed investments like table 5.13. Consider again table 5.9, in the form of table 5.14, where for space considerations we only present the MCA-part for one year.
Table 5.14 Overall table, MCA-part (based on table 5.9)
Project A Project B
MCA-part Measured effect on environment
10 forests of 1,000 hectares saved 50 forests of 1,000 hectares saved Patent citations,
measuring effect on innovation
5 patent citations 30 patent citations
Score on competition effect
4 7
Summing the results over project A and B gives table 5.15. Here, we have again used a simple average for the scored (competition) effect.
Table 5.15 Overall table, MCA-part, summed over projects Project A+B
MCA-part Measured effect on environment
60 forests of 1,000 hectares saved Patent citations,
measuring effect on innovation
35 patent citations
Score on competition effect
(5,5)
Not only does table 5.15 provide valuable background information for the summary table 5.13, it also gives more information about the aggregate impact of project A plus B.
Finally, we present an example of a full SCBA-plus results table as it would look after the calculations have been made (table 5.16). Note that the numbers in table 5.16 are fictional, while the programmes are real The next section how the indicators in table 5.16 can be computed.
Table 5.16 Overall table: Monetized effects and scores/ratings based on selected indicators (real projects; fictitious numbers)
ISS Exploitation Climate Change Initiative SCBA-part
Investment costs 1,600 M€ 170 M€
Recurrent costs Reduced costs in space
sector 80 M€ 5 M€
Increased revenues in
space sector 60 M€ 10 M€
Increased profits in other
sectors 35 M€ 5 M€
Monetary value of CO2
-reductions 0 M€ 30 M€
Net present value of
effects minus costs 600 M€ 450 M€
MCA-part
Rating on knowledge
spillovers 9 9
Score on ecological
footprint 5 10
Score on water availability 4 10
Score on space debris 8 8
Rating on competition
effect 9 8
Rating on safety effect 6 8
Rating on reputation effect 10 10
Score on (un)employment
impact (happiness) 8 7
Score on distribution
impact 7 9
Weighted total score 7.3 8.8
Source: SEO Economic Research