A cost-effectiveness analysis (CEA) is an economic analysis to compare costs and effects of two interventions. A CEA is an important measure of programme performance, bringing valuable contributions for improved programme management and providing guidance for decision-making on resource allocation and priority setting. The results of a CEA are typically expressed as a cost-effectiveness ratio (CER), with total programme resources divided by the effectiveness or outcomes of the intervention. Incremental cost effectiveness ratios (ICER) are a comparative measure of the difference in costs and effects between an intervention and an alternative.
The Research on Food Assistance for Nutrition Impact (REFANI) project, led by Action Against Hunger, examined the costs associated with the achievement of nutrition-related outcomes through cash and voucher transfer interventions. REFANI CEAs were carried out in Pakistan and Niger on projects implemented in 2016.
The primary research questions were: which intervention is more cost-effective in preventing cases of acute malnutrition; what is the cost per case of acute malnutrition averted; and how do the cost-effectiveness results compare with evidence from other interventions aimed at preventing acute malnutrition? In addition to these overarching research questions, the study also asks the following: what are the total costs associated with each intervention? What is the cost per major activity (and its share of total costs) for each intervention? What is the cost per beneficiary? What are the cost drivers of the intervention?
The REFANI CEA included both institutional and societal costs to derive a holistic perspective of resource use, including both financial and economic costs.
Institutional costs were primarily assessed using accounting data wherever possible. Additional financial costs which were not included in the programme accountancy, such as any costs from other institutional partners, personnel, or additional costs which had been allocated to further programme budgets, etc. This information was identified via key informant interviews and review of existing documentation. These costs which did not appear on accounting data were estimated using an “ingredients approach” where unit costs and quantities were estimated to build a cost calculation from the bottom up. The time spent by programme implementation staff on various activities related to the specific interventions under investigation was assessed via time allocation interviews.
Institutional costs included the following:
• The value of the inputs used in the study area
• Staff costs in terms of salary and benefits related to implementation of the programme activities, prorated according to time spent
• Transportation costs for both the implementation activities and a prorated share of joint transportation costs (e.g. for support staff)
• Office and overheads costs of both the field office and capital office, prorated according to estimated contribution to the programme
Household and community costs were assessed using qualitative and quantitative methods. A household survey was implemented alongside other impact data collection activities to get a quantitative estimate of programme costs to households in terms of direct and indirect costs. Focus group discussions were undertaken towards the end of each intervention to gather qualitative information on context and greater insight to better understand the quantitative data.
Societal costs included the following:
• Opportunity costs related to participation in the intervention such as time spent at the distribution site, traveling to/from distribution point, participating in beneficiary selection, organising distributions, etc.)
• Fees for transportation to/from distribution point, cost of snacks or drinks, etc.