Description
The CBA provides an economic perspective on investments in housing by identifying and quantifying costs and benefits wherever possible. Importantly, as an economic tool, the CBA, quantifies direct and indirect costs and benefits in monetary terms, and discounts these values over time, to allow for an accurate comparison.
The quantification of costs and benefits is important as it allows for a more objective comparison to be made between the total effects on society of RDP and SRH. For analytical purposes, financial, economic and distributional analysis is distinguished within the CBA. The financial analysis considers the costs of the project, taking into account and correcting (as far as possible) pricing and other
distortions. The economic analysis considers primary and secondary effects that result from the project and aims to quantify these as far as possible. Finally, the distributional analysis seeks to assess where the incidence of cost falls, that is who the primary beneficiaries of the project are and the main carriers of the cost burden.
In order to analyse the relevant aspects of housing, the primary intended effect of SRH is defined as being:
• to contribute to urban restructuring in order to address structural
economic, social and spatial dysfunctionalities; and Cost-Benefit Analysis: Social Rental Housing and RDP Housing Final Report
Social Housing Foundation Page ii
• to improve and contribute to the overall functioning of the housing
sector.
Based on these policy goals, several measurable variables were defined resulting from the characteristics of SRH compared to RDP housing, including effects on employment, education, health and crime. The costs and benefits of six actual projects were analysed. The principal analysis was based on comparisons of the Bram Fischerville RDP project and the Roodepoort SRH project both located in Johannesburg, and on RDP housing in
Potsdam and the Amalinda SRH housing project in East London. The analysis was supplemented with further information from the Tokologo / Mhluzi Ext 2 RDP project and the Hope City SRH project in Middelburg. Extensive primary data was collected from the six projects, including project documentation and a series of interviews with key practitioners involved in the projects. This was supplemented by secondary data; causality relationships were
established; a review of empirical and theoretical literature was undertaken, as well as engagement with an expert panel (the Project Reference Group). A detailed survey of 550 households was conducted to measure impact and effects.
