Invaluable evaluations – how non-market values strengthen evaluations

Aither is regularly engaged to undertake evaluations that demonstrate how investments have provided value for money. These evaluations allow you to improve future delivery, capture lessons for the design and delivery of other programs, and secure further funding. This process can seem daunting for investments that generate benefits not easily measured by financial analysis – known as non-market values.

We have prepared this insight piece to share our key tips on how to incorporate non-market values to strengthen evaluations.

What are non-market values and why do they matter?

Non-market values assign an economic value to goods and services without a readily observable monetary value. This includes the social and environmental values of recreational and community services and non-use benefits. Including non-market values allows you to articulate the value of these important benefits – as well as goods and services with a clear economic value – to provide a more robust and meaningful evaluation.

When should you include non-market values?

Non-market values are particularly critical for the evaluation of programs that deliver specific social or environmental changes, but they are relevant to all investments that can generate important social benefits, such as investments in regional areas. Aither regularly undertakes evaluations that incorporate non-market valuations for clients who would otherwise struggle to capture all of the economic, social and environmental values generated through their work.

What does evaluation with non-market values look like?

In 2018 Aither was engaged to undertake a lapsing program evaluation of a government investment to support the arts and creative industries in regional Victoria. Regional areas are an important part of Australia’s social and cultural identify and a major contributor to the national economy. Nearly a third of the population resides in regional areas; however, rural and regional residents face unique challenges that require strategic investment to address.

We undertook a lapsing program evaluation aligned with the requirements of Victoria’s Department of Treasury and Finance, which included a robust cost-benefit analysis supported by a qualitative assessment of program delivery. We assessed the value and impact of the program against the objectives and measures identified during the investment planning stage.

Capturing non-market values was crucial to demonstrate the benefits delivered for regional Victorians through this program. The key steps included:

• Research to identify suitable valuations of social benefits
• Collect qualitative data from stakeholders, such as cost estimates measured by visitation and use data
• Undertake stakeholder engagement to gain a deeper understanding of project outcomes.

Using this approach, we were able to quantify a range of important benefits of the program, which demonstrated the value of this investment for regional Victoria. Some of the non-market values we were able to quantify are set out in the following table.

Conclusions

Capturing non-market values enables a more robust evaluation and increases your ability to secure further funding by demonstrating value for money. It is important to analyse the full range of investment costs and benefits to reduce the risk of making poor investment decisions. This process also supports a more informed and strategic investment by reducing the focus on easily-measured investments, which tends to favour physical infrastructure with commercial benefits over policies and programs or infrastructure with social benefits. Consequently, the quantification of non-market values provides the basis for a more rigorous and strengthened evaluation to help you demonstrate the achievement of a broad range of investment objectives.