National Economic Returns and the Use of Shadow Prices

Abstract

So far the project statements that have been considered, either from the owner’s point of view or that of the economy as a whole, have been drawn up using market prices, that is, those at which transactions will actually take place, to value project inputs and outputs. It is assumed that these prices can be sufficiently accurately predicted over the operating life of the project. Estimates of the investment costs, operating costs, working capital and benefits are put together into the project statements at constant market prices.