Task requirements: Read compulsory readings and provide your analysis in response to the below three questions. Please note marking Rubrics are on Canvas submission portal. Required readings: all of these are available on the Canvas site in Assessment 3 module. "Adani Mine Case Study" case study Fahrer J. (2005). Carmichael Coal and Rail Project: Economic Assessment. Acil Allen Consulting. (available at http://envlaw.com.au/wp-content/uploads/carmichael43A.pdf) Denniss, R. (2015). Individual Expert Report for Computable General Equilibrium Modelling and Cost Benefit Analysis. Land Court of Queensland (available at http://envlaw.com.au/wp- content/uploads/carmichael45.pdf) Question 1 (18 marks): Provide your analysis of Fahrer (2015) Hints: Use the checklist listed in Snell 2009 (Chapter 6- textbook) as a guide while examining the above- mentioned publications. Also in doing this, you are encouraged to follow each and every step of the socio-economic CBA framework. You might consider focussing on following areas: - Assess if all social, environmental, economic impacts of the proposed projects (i.e. the mine, the rail and the port) have been quantified in both physical and monetary terms in Fahrer (2015); Provide qualitative assessment on the quality of estimates and quantifications conducted, reported or used in Fahrer (2015); Provide qualitative assessment on potential biases and inaccuracies in those estimates and quantifications conducted, reported and used in Fahrer (2015). Provide qualitative assessment on the choice of methods, assumptions and techniques used Fahrer (2015). For example, assess (1) the appropriateness of methodologies, (2) the appropriateness of assumptions made, (3) the sensitivity of estimates and quantifications with respect to the choice of discount rates, "sensitive" variables, and assumptions. Question 2 (8 marks): Suppose that you are requested to re-conduct the socio-economic cost and benefit analysis for the project, what would you do to improve the quality of the analysis? You are encouraged to use your understandings in relation to Question 1 to identify the focus of your analysis in this question. In general, one might focus on key areas: classification and quantification of impacts, monetary valuation of impacts, financial viability, sensitivity analysis (with respect to discount rates, estimates of impacts, etc.), distributions of welfare impact in terms of monetary costs and benefits among stakeholders. Provide suggestions and justify your suggestions. Question 3 (4 marks): Discuss the social fairness of the proposed concessional loan of $1 billion by the Australia Government for Adani to build a rail line between its proposed Carmichael coalmine and the Abbot Point shipping terminal.This chapter presents a pragmatic checklist of the aspects that may need attention in both carrying out and reporting a CBA. For any particular CBA many of them may be inapplicable, but by using a checklist one can ensure that such aspects are omitted consciously and for good reasons, rather than because they have not been thought about. As well as serving to check for possible omissions from the analysis, the list can form the basis for planning the structure of a report on a CBA. It follows the sequence that was introduced at the end of chapter 1, and is presented as a series of questions that the analysts (or a reviewer) could put to themselves both when planning the analysis and when reporting it. Some of the questions are amplified by a few examples or cross-references to earlier chapters. (a) Define the decisions that are to be guided. . What precisely is the project or course of action (or the alternatives in the case of a choice between technical alternatives)? What are its objectives (if there are several, how will the CBA deal with that)? Is the with-project situation adequately defined and described? Is it techni- cally, institutionally and politically feasible? What would really happen if the defined course of action is not followed? Are there several plausible without-project situations and if so how is one chosen for analysis purposes? Would a different choice make the analysis easier to carry out or to explain? Is the chosen one adequately defined and described? . Are all the costs and benefits of the without-project situ- ation identified?. Are there separable project components? If so, would sepa- rating them lead to one or more better projects? Are bad components avoidably riding on good ones? Is the project's internal design, packaging and timing opti- mised, to a reasonable degree of precision, by the same criteria that will be used to judge its overall merit? (b) Define the group of people whose point of view is to be applied. . Is this a financial, economic or social analysis? (There may be several interlocking CBAs of different types, in which case this whole checklist should be applied separately to each one) Is there a sub-group whose interests should receive special attention, such as the rural poor within the nation on whose behalf an economic (or social) CBA is being done? (c) Define the methods, criteria and main parameters. . How is the numeraire defined, and in what currency is it to be expressed? (section 2.3 and appendix B) What date is used as the basis for financial prices? . What discount rate is used, and why? Is it appropriate to this analysis? Are sensitivity tests needed at different dis- count rates? What indicator(s) are used and why? Are they correct for the decisions? (section 3.6) . What analysis period is used, and how does it relate to the probable physical or commercial life-span of the main components? Do some components have shorter life- spans, and if so are they covered by replacement costs? Are there any large residual values or future costs remaining at the end of the analysis period, and how are they dealt with? How are the boundaries drawn for analysis purposes? Could they be adjusted to make the analysis easier, more precise, or more transparent? (examples are in sec- tion 4.6.4 and section 5 . Can and should a lower-bound approach be used? (sec- tion 4.6.4) If it is not a lower-bound analysis, does the analysis capture all the relevant costs and benefits? How are the costs and benefits expressed in economic (or social) terms? If shadow-price factors are used, how arethey arrived at and justified (section 2.5)? Are they precise enough for the purpose? . Are there any cost or benefit categories whose financial prices are expected to change in the future at a rate mark- edly different from general inflation? Or any whose eco- nomic value will change? In either case, is escalation allowed for in the computation-in the base case or as a sensitivity test? . Are there some effects that could be treated computation- ally either as positive benefits or as negative costs? If so, which arrangement is better? (d) Calculate the benefits. . Are all the incremental benefits identified, quantified and valued so that they correspond wholly and solely to the decision which the analysis is guiding? Have all relevant benefits of the without-project situation been considered? . Do the project outputs replace other production within the country? If so, have the implications been thought through? . Will the annual incremental benefits in the project's opera- tion phase reach their normal level instantaneously when the project components are commissioned, or will there be a gradual build-up for one or more reasons (sections 3.3, 4.2)? How can its speed be estimated? (e) Calculate the costs. . Are all the incremental costs identified, quantified and valued so that they correspond wholly and solely to the decision which the analysis is guiding? Have all relevant costs of the without-project situation been considered? . Have sunk costs been identified and omitted from the analysis? Are they really irretrievably sunk or would they have some value in the without-project situation? . Are all ongoing, recurrent or annual costs of the project's steady operation phase included? (operation and mainte- nance, repairs, lubrication, energy inputs, training of re- placement staff) . Are all periodic costs included? (replacement of electrical, mechanical, or fast-wearing components, painting) Are any large late costs properly included? (decommis- sioning and long-term environmental effects of a nuclear power station).[it] iii The net benet stream. I is it necessary to show the net benets. year by year? [the cash flow: if costs and benets are discounted separately. for instance in order to calculate a Eff:- retie. calculation and presentation of the net benefits may be redundant]. Calculation of the indicators. I is the calculation format convenient for result presentation and sensitivity tests? ltitan a suitably designed spreadsheet be used for both calculation and reporting? Sensitivity tests [section 1?]. I Are all relevant variables and sources of uncertainty covered? I re there any matters of special concern to some or all of the dilrlkf. or other affected parties. which should be included as sensitivity tests for purposes of communication or persuasion even if not strictly needed for analysis? i I{Jan the sensitivity tests be done in terms of physically meanin ul changes instead of arbitrary percentage shifts? I Would some switching values be helpful to decision- makers? e [a there a case for varying two parameters at once? I is there a case for probabilistic risk analysis? [appendix it] I Do correlations or causal links between parameters need to be considered? Reporting. I What aspects have been consciously excluded from the EBA and need to be emphasised alongside its results? [environmental or social impacts. tin-quantifiable effects. institutional aspects} I Are the CEA results to be used in a rnulticriterion analysis alongside other aspects? - Have correlations or potential doublencounting between the can and other aspects been thoroughly thought through and transparently reported? o Are the concepts of viability and desirability adequately distinguished? [sections 3.3. 4.2] l is the report aimed at multiple audiences with different perspectives. needing different information? If so. I.vit] it satisfy all the audiences? I- Will the report. or data sources clearly referred to in it. enable a reader or enquirer to check the whole chain of computation? Does the reporting and summarising of results constitute an analyst's usurpation of a decision-maker's role? A particular CBA can be quite simple and its report quite brief, since in any one case many of the above questions may not be applicable, but it is still worthwhile to go through a checklist like this one so as to avoid inadvertently omitting something relevant. This checklist concludes the six chapters and thus the presenta- tion of the main aspects of cost-benefit analysis, generally aimed at non-economists. The seven appendices which follow give details and many literature references so that readers who need to can examine particular aspects more thoroughly. The last four appendices contain examples, discounting tables and the references themselves