10.3 External Support
The amount of external advisory support is a key determinant of the cost of SBIA. In the three SIA case studies, external advisory or resource people costs, including international travel and subsistence, was about three quarters of the total workshop costs. Our experience is that the theory of change approach does require training and advisory inputs; on the other hand the methodology is more accessible to project staff than traditional impact assessment methodologies, and does not involve statistical analysis (econometric or other forms of statistical analysis also make it challenging for projects to communicate monitoring results to stakeholders, and to use the information for adaptive management purposes). It should be recalled that the high cost of matching methods approaches (typically in the range $50,000-150,000) is largely due to the need for specialized consultants at the design and data analysis stages.
While it could be possible for project staff to undertake the proposed SBIA process without outside support, we do not advise it. It can be a false economy to “go it alone”, if it is later found that the methods lack credibility, possibly resulting in a failed verification audit or the need for a much more expensive study.
10.4 Contextual Factors
The cost of the SBIA process also depends on various contextual factors:
• Social complexity – at one end of the spectrum, an A/R project with few community or stakeholder interactions may require only a light SIA study; on the other hand, a REDD project with indigenous people, and where the project design affects current livelihoods, is likely to be socially and politically complex.
• Scale – like all transaction costs there are diseconomies of (small) scale, while larger projects incur lower transaction costs per unit of carbon sold.
• Location – a more remote project location means higher travel costs, as experienced with the SIA case study in the Brazilian Amazon.
10.5 Integration of SBIA with Other Carbon Project Development Tasks
A vital way of keeping costs down is to find ways of integrating SBIA with other aspects of the project management cycle, especially at the design stage. Combining SBIA with other aspects of project development should also result in a more robust and effective project design, including for carbon objectives. There are several opportunities for synergy in the project design phase:
• Conducting legal due diligence: an essential part of SBIA Stage 1 involves assessing tenure, boundary, or land conflict issues, and clarification of carbon property rights.
• Defining the project participants: another key activity in SBIA Stage 1 is stakeholder identification and analysis, including assessing the interests, influence over project goals, and relationships between stakeholder groups and sub-groups.
• Constructing the carbon baseline, especially the analysis of agents and drivers of deforestation or degradation: this could be combined with SBIA Stages 1 and 2.
• Drafting the design of project activities and land-use incentives strategy: SBIA Stage 3 can feed into the project design by confirming that provisionally identified activities are strategic, and by suggesting modified or new entry points that contribute to stakeholder buy-in and land use incentives.
• Analyzing carbon leakage risks and mitigation activities: SBIA Stage 4 can help assess the risks of displacing livelihoods or land uses, and how best to avoid or mitigate these risks, while SBIA Stage 5 can inform the choice of indicators for monitoring leakage risks.
• Calculating the VCS risk buffer discount and developing strategies to mitigate non-permanence risks:
SBIA Stages 1, 2, and 4 provide a strong basis for at least part of the risk rating under the VCS (or other standard), while SBIA Stage 5 can inform the choice of indicators for monitoring specific non-
permanence risks.
• Monitoring and verifying carbon, social, and biodiversity benefits: it is too early to assess the extent to which the monitoring, analysis, and reporting tasks for carbon, social, and biodiversity outcomes and impacts can be combined, but project proponents should aim to synchronize them as much as possible.
10.6 A Broader Understanding of the Cost-Effectiveness of SBIA
Project proponents should also bear in mind that cost-effectiveness is not just about the cost of meeting a set of standards. As stressed at various points of this Manual, the benefits of good practice SBIA go well beyond providing credible monitoring information and satisfying the auditors.
Firstly, good practice SBIA should save costs. For example, it should help early detection of problems, thereby avoiding both the negative impacts and the higher costs of sorting out problems (if this is possible) after they have become significant and possibly unmanageable. It could also avoid the need for an expensive independent SBIA study being required for verification.
A strength of the theory of change approach is its capacity to contribute to other parts of the project cycle, especially in terms of generating a strategic project design and adaptive management. Another advantage is that the method and results can be relatively easily communicated and understood by a range of stakeholders.
The links between a robust SBIA process, and social and carbon sustainability therefore make good practice SBIA an issue of project and investor self-interest, as reflected in an observation that:
“Although the unit costs of carbon abatement via REDD would most likely increase with efforts to integrate equity and poverty concerns, these increased costs need to be met in order to ensure the delivery of project or program outputs – indeed this expenditure is likely to be highly cost-effective”
(Olsen and Bishop 2009).