From a private financial perspective, similar concepts
apply as in the economic analysis, but the
benefits and costs are estimated in terms of the financial
benefits received and costs borne by private
producers. What we need to estimate is the net financial
benefit per tonne of pig waste disposed of
under each option. The option with the highest net
benefit is the best from a private financial perspective.
Cash costs will consist of investment costs,
additional equipment costs, and operating and maintenance
(O&M) costs. The way the costs of the initial
capital investment are calculated depends on
how much is outlaid directly by the farmer, any
subsidies that are received, and the interest rate that
is charged on borrowed funds. Direct investments
by farmers (using their own savings or funds) will
be a direct financial capital cost. Any upfront capital
subsidy paid by the government will be a financial
benefit and hence a cost offset. Where a lower, concessional
interest rate is charged, the cost savings
(compared with a higher market rate of interest) will
also represent a benefit or cost offset in calculations
of private financial net benefits. The sales of products
that are produced by each waste management option,
i.e., fertilizer, fish feed, biogas and electricity, are the
financial benefits of each option.
Because a financial analysis is focused only on the
farmers’ private financial prospects and does not take
into account externalities or external environmental
costs, it is inadequate in determining the efficiency of
resource allocation. Nevertheless, it is the best way to
financially assess different options. The main reason
for conducting a financial analysis here was to see
whether, and if so, how much more subsidies might
be required to induce farmers to switch to biogas
production rather than continuing to use cheaper but
more environmentally polluting technologies. There
are two crucial questions in our financial analysis.
They are: (1) Why do farmers choose the waste
management options that they do? and (2) What
needs to be done to make farmers change their
behaviour and adopt more environmentally friendly
waste management options? To answer these two
questions, a comparison of the different financial
NPVs of the five alternative waste management
methods was necessary.
5.2. Financial analysis. Analysis of difference in
net income between different methods of approach
is very important in finding the best method for
application in waste disposal.
In this study, a financial analysis is used for comparing
the costs and benefits between different alternatives.
The main steps in this analysis are:
♦ Identifying the costs and benefits of each alternative.
From a private financial perspective, similar concepts
apply as in the economic analysis, but the
benefits and costs are estimated in terms of the financial
benefits received and costs borne by private
producers. What we need to estimate is the net financial
benefit per tonne of pig waste disposed of
under each option. The option with the highest net
benefit is the best from a private financial perspective.
Cash costs will consist of investment costs,
additional equipment costs, and operating and maintenance
(O&M) costs. The way the costs of the initial
capital investment are calculated depends on
how much is outlaid directly by the farmer, any
subsidies that are received, and the interest rate that
is charged on borrowed funds. Direct investments
by farmers (using their own savings or funds) will
be a direct financial capital cost. Any upfront capital
subsidy paid by the government will be a financial
benefit and hence a cost offset. Where a lower, concessional
interest rate is charged, the cost savings
(compared with a higher market rate of interest) will
also represent a benefit or cost offset in calculations
of private financial net benefits. The sales of products
that are produced by each waste management option,
i.e., fertilizer, fish feed, biogas and electricity, are the
financial benefits of each option.
Because a financial analysis is focused only on the
farmers’ private financial prospects and does not take
into account externalities or external environmental
costs, it is inadequate in determining the efficiency of
resource allocation. Nevertheless, it is the best way to
financially assess different options. The main reason
for conducting a financial analysis here was to see
whether, and if so, how much more subsidies might
be required to induce farmers to switch to biogas
production rather than continuing to use cheaper but
more environmentally polluting technologies. There
are two crucial questions in our financial analysis.
They are: (1) Why do farmers choose the waste
management options that they do? and (2) What
needs to be done to make farmers change their
behaviour and adopt more environmentally friendly
waste management options? To answer these two
questions, a comparison of the different financial
NPVs of the five alternative waste management
methods was necessary.
5.2. Financial analysis. Analysis of difference in
net income between different methods of approach
is very important in finding the best method for
application in waste disposal.
In this study, a financial analysis is used for comparing
the costs and benefits between different alternatives.
The main steps in this analysis are:
♦ Identifying the costs and benefits of each alternative.
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From a private financial perspective, similar concepts
apply as in the economic analysis, but the
benefits and costs are estimated in terms of the financial
benefits received and costs borne by private
producers. What we need to estimate is the net financial
benefit per tonne of pig waste disposed of
under each option. The option with the highest net
benefit is the best from a private financial perspective.
Cash costs will consist of investment costs,
additional equipment costs, and operating and maintenance
(O&M) costs. The way the costs of the initial
capital investment are calculated depends on
how much is outlaid directly by the farmer, any
subsidies that are received, and the interest rate that
is charged on borrowed funds. Direct investments
by farmers (using their own savings or funds) will
be a direct financial capital cost. Any upfront capital
subsidy paid by the government will be a financial
benefit and hence a cost offset. Where a lower, concessional
interest rate is charged, the cost savings
(compared with a higher market rate of interest) will
also represent a benefit or cost offset in calculations
of private financial net benefits. The sales of products
that are produced by each waste management option,
i.e., fertilizer, fish feed, biogas and electricity, are the
financial benefits of each option.
Because a financial analysis is focused only on the
farmers’ private financial prospects and does not take
into account externalities or external environmental
costs, it is inadequate in determining the efficiency of
resource allocation. Nevertheless, it is the best way to
financially assess different options. The main reason
for conducting a financial analysis here was to see
whether, and if so, how much more subsidies might
be required to induce farmers to switch to biogas
production rather than continuing to use cheaper but
more environmentally polluting technologies. There
are two crucial questions in our financial analysis.
They are: (1) Why do farmers choose the waste
management options that they do? and (2) What
needs to be done to make farmers change their
behaviour and adopt more environmentally friendly
waste management options? To answer these two
questions, a comparison of the different financial
NPVs of the five alternative waste management
methods was necessary.
5.2. Financial analysis. Analysis of difference in
net income between different methods of approach
is very important in finding the best method for
application in waste disposal.
In this study, a financial analysis is used for comparing
the costs and benefits between different alternatives.
The main steps in this analysis are:
♦ Identifying the costs and benefits of each alternative.
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