Ten Magic Economic Spells to Cast on Your Mitigation, Conservation, Restoration, and Adaptation Projects (Part 2)

*For the first four spells, see part one.

5. Expandio – The impact of your projects might be bigger than you thought!

image of a water surface after something has dropped in

Instruction – Use multiplier to calculate the ripple effect of one dollar you spend.

Use – While projects benefit the environment, they also provide jobs for the community and acquire goods and services from the market. For example, a restoration project will need a crew of engineers, field technicians, project coordinators, etc. You might also need vegetation like trees, or some heavy equipment like excavators. This economic spell can help you to estimate the total economic impacts of your projects to the society, including:

  • Indirect effect, such as supporting the contracting company to hire a new worker to operate the excavators.
  • Induced effect, such as supporting the sales of the local groceries stores as workers spend their salaries on groceries.

Caution – Multipliers are highly geographic and context specific. There are some models like RIMSII and IMPLAN that help you to choose the suitable multipliers and perform the correct computation. Also be aware that sometimes you have to make adjustments to avoid double-counting the effects.

6. Reducio – One the other hand, the values might be smaller than you thought…

Conceptual graph of subjective value versus time from present with value decreasing with time similar to y=1/x.

Instruction – Discount the future values to present values.

Use – Don’t forget time as a significant factor! Nobody would choose to get one dollar ten years later if they could get it right now. That means, future value is kind of exaggerated. So discounting is needed when:

  • Comparing a project’s future benefits and present costs.
  • Arranging a sequence of projects to optimize the investment streams in a time frame.

Caution – For federal programs, remember to check out the most updated discount rates from Office of Management and Budget. They release new numbers every year.

7. Aparecium (Revealing Charm) – Reveal hidden secrets or properties.

Image of a shell on the sand

Instruction – Add risk and uncertainty dimensions to your valuations.

Uses – Uncertainty is always inherent with data sufficiency, project efficacy, and future forecast. A range of economics techniques can be applied to face uncertainty, regarding what issues are involved:

  • Assess varying scenarios, such as damage under a 50-year flood versus a 100-year flood.
  • Attach probabilities to different potential project outcomes.
  • Estimate the benefits of postponing a project until you can obtain sufficient information.

Caution – When it’s impossible to agree upon probabilities, try to find other alternatives to support decision making, such as a set of criteria to rule out unlikely options.

8. Packing Charm – Magically organize and compact everything into one measure.

Image of a cat in an open suitcase full of clothes

Instruction – Do some magic math: Net Present Benefit = Present Benefit – Present Cost; Return on Investment = Net Present Benefit / Present Cost…

Uses – When you finally gather tons of the information but need a simple measure to seek the “best” economically sound proposal, benefit-cost analysis (BCA) comes in handy. It can help you:

  • Compare scenarios and decide where, when, and how to conserve/mitigate/restore/adapt, and to what extent.
  • Address project budgeting.

Caution – Be alert! You’re looking for the alternative that yields the greatest increase in the welfare for the general public, not only for the organizations that funded your project!

9. Alohomora – Open doors for implementation.

Image of a door

Instruction – Engage stakeholders and apply some economic instruments to design an appropriate mechanism for implementation.

Uses Economic instruments can also provide incentives for both public and private action, such as:

  • Charges, taxes, and tradable permits.
  • Funds and subsidies.
  • Community risk pool, trusts, and bonds.
  • Insurance, reinsurance, and loans.

Caution – Be careful which door you’re opening! There might be “monsters” behind the doors: disincentives, market failure, and inequity. To make things right, you’ll also need to take cultural and political factors into consideration. Remember, one size does not fit all.

10. Accio (Summoning Charm) – Summon an expert in time of need.

Instruction – Know the contact information of the expert, shout “Accio” and he/she will fly to you.

Uses – After learning all these economic spells, you can start to perform magic now. However, the job can be hard, especially during emergencies or in some rare situations. An expert can offer you guidance and save you from deadly mistakes. So before you start your project, know the experts in this area and get connected with them.

Caution – Experts, especially economic experts, like to talk in a bizarre language. But don’t worry, they’re usually nice and kind. Just be patient and things will work out easier than you thought. 

If you’re already a skilled wizard (or witch) and tried some of the spells before, hopefully this list keeps you entertained. You’re welcome to leave comments, share your experiences, or introduce other spells you think are beneficial to others. If you’re just entering the magic world, hopefully these spells are helpful for you to graduate from Hogwarts. If you are a muggle, simply find a wizard (or witch) for help!

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