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Economic and financial analysis

Financial analysis is undertaken to determine a budget for the project, as well as the intrinsic (before financing) and financial (after financing) value of a project, for individual economic entities or a group of entities. It is a very useful tool to verify the ‘affordability’ of water for the poorest groups. Economic analysis broadens the perspective to national scale and allows assessment of the relevance, effectiveness, efficiency and viability of the project. However, as it cannot always give a full picture of the factors affecting a given project, it should not be used as a sole criterion for making decisions, but used in combination with other analyses (see Chapter 13 for a fuller description).

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