Environmental Projects Of Technical And Economic Analysis

Environmental pollution is a phenomenon caused by human activities that degrade environmental quality and damage the normal existence and development of mankind and other lives. With technological development, the technical processes and equipment used in environmental projects have also improved rapidly. Thus, whether an environmental project is approved depends on the assessment from both technical perspective and economic perspective. Technical economic evaluation is also known as project economic evaluation; it refers to the assessment and analysis made to the economic effects of a project during the decision-making process. This evaluation constitutes the core content of a feasibility study and forms the basis for investment decision-making. Technical economic evaluation normally answers two questions: whether a project is economically acceptable and when there are multiple options which option is the optimal one. Technical economic evaluation can be carried out at two different levels: financial evaluation and national economic evaluation. Financial evaluation is also known as micro economic evaluation, it is based on the current financial and taxation policies, prices, and the enterprise's own business conditions to evaluate a project. National economic evaluation is based on national conditions using parameters such as shadow prices to analyze the costs and returns. National economic evaluation is at a level higher than technical economic evaluation. When the results of the two evaluations are inconsistent, the national economic evaluation takes precedent. This thesis analyses the costs and effects of a sewage treatment project to understand the implications of national economic evaluation. It is important to first understand the basic concepts of technical economic evaluation, such as investment, production costs, fixed assets depreciation, appropriation and taxation. In the analysis process, it is important to stress the time value and equivalent value of capital; this involves the calculation of single rate and compound rate, and the relationship among current value, year-end value and final value. When evaluating a project, the first thing to do is determine whether it's a deterministic project or non-deterministic project. For deterministic project using single project analysis, one can use net current value method, internal benefit rate method and investment return rate method, and then use the results to determine the feasibility of the project. When there are two or more options, then one must use net current value method, net year-end value method, cost current value and cost year-end value method to make a judgment and find the most optimal option. Uncertainty analysis includes profit/loss analysis, sensitivity analysis, and probability analysis. We have chosen an environmental project and proposed two options for the project. We first used absolute estimates method to assess the economic feasibility of the project. When both options are feasible, we used relative estimates method to find the most optimal option. For the optimal option we also applied financial evaluation and national economic evaluation to assess the project from technical process perspective and technical economic perspective.