Stories in Numbers: Using
Financial Indicators to Reveal
Household and Community
Narratives in Impact Evaluation of
Water Projects
Michael P. Canares
HNU Center for Research and Local Governance
Structure of the Presentation
• Conclusion
• Background of the paper
• Amplifications of the Measures Used
• Implications on Impact Evaluation
Research
Conclusion
• While not a substitute to other qualitative
and quantitative measurements, financial
indicators have the capacity of revealing
important stories from the perspective of
beneficiaries and communities and
reinforce, if not enrich, our understanding
of program or project inputs, process,
achievements, issues, and concerns.
Do these things mean something?
25000
20000
15000
Coastal
Upland
10000
5000
0
Project Area 1
Project Area 2
Per capita cost of water development project, area classification compared
Problem with auditors and
accountants
• Static textbook concepts (e.g. lower per
capita costs, the better)
• Deskwork versus fieldwork (e.g.
interpreting than experiencing)
• Biased interpretations (e.g. costs over
benefits)
The bias of this paper
• Financial indicators are not to be read
devoid of “stories from the field”
• Financial indicators, as a matter of fact, tells
“stories from the field”
• Financial indicators reveal strong evidence
on outcomes and impact to supplement
qualitative representations
Indicator 1 (HH): Cost of Getting
Water
Traditional comparison of Y1 and Y0
Cost of getting water is computed using per
unit costs (e.g gallon or liter)
Household Narrative and Conclusions
‘Before the project, we get water from the pump owned
by our neighbor. She charges us 5 peso per gallon.
Every week, we consume around 10 gallons. Now, we
pay 50 pesos a month for our Level II water system.’
Pre Project
(Php5 x 10 x 4 weeks)
Post Project
Net Savings
P200.00
50.00
150.00
This is informative but insufficient. For example, the
‘neighbor’ is two kilometers away, and walk is about 40
minutes due to steep terrain.
Financial Indicators and Conclusions
Pre-project
P5xP10xP4 wks
labour cost (imputed)
P225/8x5x4wks
Post-project
Net Savings
200.00
562.50
762.50
50.00
712.50
The indicator expands cost of water by including labour opportunity
costs, as well as the differential costs of access due to geographical
limitations.
Limitation: There is an implicit assumption that it was productive
labour that was affected. What if children are the ones who fetch the
water from the source?
Indicator 2(HH): Released Financial
Resources
• Indicates amount of funds released for
other household expenses
• May be expressed as a percentage of
household budget or as a consumption
unit in other goods
Financial Indicators and Household Narratives
Pre project (actual cash outlay)
Post Project (actual cash outlay)
Freed up cash
Percentage of household budget
Alternative consumption (rice)
P200.00
50.00
150.00
5.35%
4.17 kilos
‘Because water came cheap, we are now able to spend
more on other needs of the family.’
Limitation: There is an implicit assumption that freed up resources are
used for food and essential consumption items. This may not be true
when freed up resource is used for betting on a numbers game.
Indicator 3(CO): Replacement
Capacity
• Indicates the ability of the water service
provider (association) to construct the
same water service facility after end of
useful life of current one
FIs, Community Narratives, and Interpretations
Replacement Cost
P7,856,550.00
Depreciation provision 15 years
Differential Cost of new asset
Required Net Income Per year for 15 years
P6,489,000.00
P1,367,550.00
P91,170.00
Average income, year 1-5
Income Deficiency
P65,468.00
P25,702.00
‘The facilities’ useful life is 15 years. This means we need to raise
sufficient funds to be able to construct it on our own in the
long term.’
The association’s options need to be pointed out – increasing water
rates, minimizing costs.
Indicator 4 (DA): Per Capita Cost of
WDP
25000
20000
15000
Coastal
Upland
10000
5000
0
Project Area 1
Project Area 2
The indicator gives a good sense of how much funds are needed to
implement a particular project in similar circumstances, as long as
context is equally analyzed.
What are the implications of these
on impact evaluation research?
• Early on, data needed for financial
analysis needs to be incorporated as part
of baseline data generation
• Research design should consciously
incorporate financial indicators to
investigate commonalities and variations
Many thanks for the kind
attention.