CHOICE OF INTERVENTIONS

AND SELECTION OF
ALTERNATIVES

MK MANAJEMEN PROGRAM PANGAN DAN GIZI

PS S2 GIZI MASYARAKAT
FEMA - IPB

1
DM-2019
PROGRAM/PROJECT FORMULATION,
CONSIDER THE FOLLOWING :

1. RELEVANCE
2. FEASIBLE:
- OPERATIONALLY
- TECHNICALLY
- CULTURALLY
- POLITICALLY
- ECONOMICALLY
3. Other(s)

2
DM-2019
RELEVANCE..
• Formulated based on the identifief problem(s)
• Is (are) the best alternative to solve the
problem(s)

3
DM-2019
FEASIBLE

Feasibility – the measure of how the policy, programs or

intervention will succesfully implemented and achieve the
objective(s)

Feasibility analysis – the process by which feasibility is

measured.

11-4
DM-2019
 TESTS FOR FEASIBILITY
Operational feasibility – a measure of how well a solution meets the
system requirements.
Cultural feasibility - a measure of how well a policy (and
programs/interventions) will be accepted by target
beneficiaries/community;
Political feasibility - a measure of how well a solution will be
accepted by organizational climate (political leaders/parliament,
Govt Officials)
Technical feasibility – a measure of the practicality of a technical
solution and the availability of technical resources and expertise.
Economic feasibility - a measure of the cost-effectiveness of a
project or solution.

5
DM-2019
 OPERATIONAL FEASIBILITY

How well proposed policy solves the problems

and takes advantage of opportunities identified
during the scope definition and problem analysis
phases?
How well proposed policy satisfies food and
nutrition system requirements identified in the
requirements analysis phase?
11-6
DM-2019
 FOOD AND NUTRITION SYSTEM
NATIONAL–PROVINCE–DISTRICT/CITY-COMMUNITY HOUSEHOLDS INDIVIDUAL

Socio-economic, political,
civil, institutional and cultural Food Economy
environment HOUSEHOLD
LIVELIHOOD
STRATEGIES
FOOD AVAILABILITY ASSETS & ACTIVITIES
Demographic trends (trends, levels)
Education Food production FOOD CONSUMPTION
Macro-economy Food imports (net) HOUSEHOLD Energy intake
Foreign trade Utilization (food, non food) FOOD ACCESS Nutrient intake
Policies and laws Stocks
Natural resources
Basic public services CARE PRACTICES
STABILITY OF FOOD
Domestic markets Child care
AVAILABILITY AND FOOD
Technology Feeding practices
ACCESS NUTRITIONAL
Climate conditions Nutritional knowledge
(Variability) STATUS
Urban/rural infra-structure Food preparation
Market integration and
Civil-strife, Armed conflict Eating habits
functioning
Health trends (HIV/AIDS) Intra-household food
Stock management
Household characteristics distribution
Livelihoods systems
ACCESS TO FOOD FOOD UTILIZATION
Social institutions
(trends, levels) HEALTH & SANITATION BY THE BODY
Cultural attitudes, gender
Food production Health care practices Health status
Purchasing power Hygiene
Access to markets Water quality
Social entitlements Sanitation
Food safety & quality

7
DM-2019
 CULTURAL FEASIBILITY

How do end users (community, target groups/ beneficiaries)

feel about their role in the policy making and programs
definition?
What end users (commuity, target groups/ beneficiaries) may
resist or not agree with the policy or program? How can this be
overcome?
How will the environment change? Can target beneficiaries
adapt to the change?

11-8
DM-2019
POLITICAL FEASIBILITY

Does political leaders/parliament and even the

executive (related sectors) support the policy?
How will the policy environment change?
Can political leaders and policy makers adapt to
the change?

11-9
DM-2019
 SOAL PANGAN
ADALAH SOAL HIDUP
ATAU MATI
“ Kami menggoyangkan
langit, menggempakan
darat, dan
menggelorakan
samudera agar tidak jadi
bangsa yang hidup
hanya dari 2 ½ sen
pidato Presiden Republik
Indonesia waktu hendak
sehari.
Bangsa yang kerja
meletakkan batu-pertama “
Gedung Fakultet Pertanian di
Bogor pada tanggal 27 April
1952
keras, bukan bangsa
tempe, bukan bangsa

10
DM-2019
kuli. Bangsa yang
#BungKarno
 11
DM-2019
TECHNICAL FEASIBILITY

Is the proposed technology or solution

practical?
Do we currently possess the necessary
technology?
Do we possess the necessary technical
expertise?

11-12
DM-2019
ECONOMIC FEASIBILITY

• Most of nutrition interventions as well as it’s

outcomes and impacts are multi-dimensional
and difficult to capture in single indicators, but
this is not a barrier to applying economic
analysis to appraising nutritional program.

13
DM-2019
 FRAME WORK OF ECONOMIC ANALYSIS
GENERAL APPROACHES

• Two types of the generic technique have been

identified and are distinguished by the nature
of the outcome, that are: cost-effectiveness
analysis (CEA) and cost-benefit analysis
(CBA).

• In CEA the outcome is measured in physical

units, e.g. decrease in malnutrition rates,
number of death averted, etc. while in CBA the
outcomes are expressed in money units.

14
DM-2019
 FRAME WORK OF ECONOMIC ANALYSIS
BASIC PROCEDURES

1. Identification of program implementation

framework, especially objectives, beneficiaries,
outputs, and outcomes that are expected to be
achieved through each alternatives intervention.
2. Quantification and valuation of economic
benefits for each alternatives intervention that
are expected to be achieved.
3. Quantification and valuation of all costs
required to implements for each alternatives
intervention that are to be invested and spent.

15
DM-2019
 FRAME WORK OF ECONOMIC ANALYSIS
BASIC PROCEDURES

4. Calculation of present value of all economic

benefits and costs of intervention over the
impact period of intervention.
5. Calculation and interpretation cost-
effectiveness analysis (CEA) and/or benefit-
cost analysis (BCA).
6. Performing of sensitivity analysis to tests the
influences of the variable value changing on cost
or benefits.

16
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
QUANTIFICATION OF BENEFIT

17
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
QUANTIFICATION OF BENEFIT

18
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
QUANTIFICATION OF BENEFIT
LIVE SAVED GAIN (LSG) OR DEATH AVERTED

PAR = NDP x (RR-1) / (1 + (NDP x (RR – 1))

LSG = PAR x NTB x MR

Where
PAR = Population Atributable Risk, percentage of target population
with relative risk of death due to malnutrition.
NTB = Number of Targeted Beneficiaries, number of targeted
population to be covered by and participated on intervention.
NDP = Nutrition Deficiency Prevalence, percentage of population
with malnutrition status.
RR = Relative Risk, relative risk of death attributable to malnutrition
MR = Mortality Rate, number of death per 1000 live births

19
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
QUANTIFICATION OF BENEFIT
DISABILITY-ADJUSTED LIFE YEAR (DALY)
• The DALY as a measure of the burden of disease and it
reflects the total amount of healthy life lost, to all causes,
whether from premature mortality or from some degree of
disability that can be physical or mental. during a period of time.
• The DALY is an indicator of the time lived with a disability
and the time lost due to premature mortality. The duration of
time lost due to premature mortality is calculated using standard
expected years of life lost with model life-tables. The reduction in
physical capacity due to morbidity is measured using disability
weights. The value of time lived at different ages has been
calculated using an exponential function which reflects the
dependence of the young and the elderly on the adults.

20
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
VALUATION OF BENEFITS

• The many channels through which benefit may

operate are grouped as direct and indirect gains.
• Direct gains arising from improvements in productivity
as result of nutrition status improvement and saving
of resources that are currently directed to dealing with
diseases and other problems related to malnutrition.
• Indirect gains arising from links between nutritional
status and schooling, nutritional status and cognitive
development and subsequent links between
schooling, cognitive ability and adult productivities.

21
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
VALUATION OF BENEFITS

• Productivity gains are the result of the future live lost

that would have otherwise been utilized in some
economic activity. Future productivity losses occur
due to the death of a potential worker.
• The levels of malnutrition entail very high human and
economic costs. One indicator of the human costs is
elevated death rates.
• Studies suggest that protein energy malnutrition
(PEM) as well as vitamin A and iron deficiency are all
associated with higher infant and child death rates.

22
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
VALUATION OF BENEFITS

• Beyond the issue of increased mortality, malnutrition

increases the risk of illnesses that impair the welfare
of survivors.
• Children with underweight use outpatient services
more frequently than do children with normal weights.
• Increased morbidity has direct resource costs in terms
of health care services as well as lost employment or
schooling for the care givers.
• The magnitudes of these costs differ according to the
country’s medical system, markets and policies.

23
DM-2019
 BENEFIT OF NUTRITION INTERVENTION
VALUATION OF BENEFITS

24
DM-2019
 COSTS OF INTERVENTION
VALUATION OF COSTS

• Financial costs refer to actual expenditures

or outlays made for a specific nutrition
intervention.
• Economic costs represent the opportunity
cost of using resources and inputs in one
intervention rather than in their next best
alternative use.

25
DM-2019
 COSTS OF INTERVENTION
VALUATION OF COSTS

Category Formula For Cost Formulation

Investment Costs :

Annual Value of (Number of vehicles by type x Percent use x Replacement value) /

Vehicles PWAF based on the useful life of vehicles

Annual Value of (Number of equipment by type x Percent use x Replacement

Equipment value) / PWAF based on the useful life of equipment

Annual Value of (Number of buildings by type x Area used for the health activity x
Buildings Unit construction cost per unit of area x Percent use) / PWAF
based on the useful life of buildings
Annual Value of Same as recurrent training costs/ PWAF based on turnover rates
Training

Annual Value of Same as recurrent promotion costs/PWAF based on the useful life
Promotion of materials

26
DM-2019
 COSTS OF INTERVENTION
VALUATION OF COSTS

Category Formula For Cost Formulation

Recurrent Costs
Personnel Number of personnel x {(Number hours/week on activity /
Number of working hours/week)} x Gross monthly salary
and benefits x 12
Pharmaceuticals Pharmaceutical cost: (Quantity used/person/year x
Number of episodes/person/year x Population covered x
Unit price
Per Diem Frequency of supervision visits/month x 12 x Duration
(days) x Per diem rate x Percent use
Supplies Quantity used/person/yr x Number of visits x Unit price x
Percent use
Vehicle Operation & Fuel Cost = (Number roundtrips per month x 12 x Distance
Maintenance per roundtrip x Cost/unit fuel) / Distance traveled per unit
of fuel consumed x Percent use
Maintenance Cost = Frequency of maintenance visits/year
x Average cost/visit x Percent use
Repair Cost = Frequency of repairs/month x 12 x Average

27
cost of a repair x Percent use
DM-2019
 COST OF INTERVENTION
VALUATION OF COSTS
Category Formula For Cost Formulation

Equipment Repair Cost = Frequency of repairs/month x 12 x Average cost/repair x

Operation & Percent use
Maintenance Maintenance Costs = Frequency of maintenance visits/year x Average
cost/visit x Percent use

Building Operation Average expenditures per month for building maintenance X 12 months x
& Maintenance Percent use

Promotion Costs of broadcasting = Duration of broadcast (mins or secs) x Frequency of

broadcasts/month x 12 x Cost/unit of time x Percent use of broadcast for
health activity
Cost of printed matter = Volume of materials per month x Frequency of
reproduction/month x 12 x Unit cost of reproduction x Percent use of
materials for health activity

Training Training Costs = Number of participants per training session x Duration of

training session (days) x Per diem rate x Percent use for a health activity
Trainer Costs = Number of trainers per session x Gross monthly salary x
{Duration (days)/ number of working days per month} x 12 x Percent use for
health activity
Training Materials = Volume of training materials per session x Frequency of

28
reproduction x Unit cost of reproduction x Percent use for health activity
DM-2019
 COST OF INTERVENTIONS
VALUATION OF COSTS
Individual cost inputs, as a proportion of the total, have been estimated by
WHO for the Mother-Baby Intervention Package that consists of a cluster of
interventions designed to be integrated with and in most cases delivered
through existing health systems

Inputs % Cost Inputs % Cost

Maintenance & utilities 6
Annualized capital costs 16
Drugs & Food Supplement 14 Clinical personnel 39
Laboratory supplies 1
Management & supervision 3
Bed costs 4 Support salaries 3

IEC and social marketing 3 Transport 1

Consumable supplies 10

29
DM-2019
 COSTS OF INTERVENTIONS
BASE ESTIMATE OF COSTS
Intervention Cost/Beneficary/
Year (US$)
Micronutrient fortification
Iodine 0.05
Iron 0.09
Vitamin A 0.05-0.15
Micronutrient supplementation
Iodine 0.50
Iron (per pregnancy) 1.70
Vitamin A 0.20
Mass media education programs 0.20-2.00

Breastfeeding promotion 2.00-3.00

30
DM-2019
 COSTS OF INTERVENTIONS
BASE ESTIMATE OF COSTS

Intervention Cost/Beneficary/
Year (US$)
Education program (home gardening, 5.00-10.00
growth monitoring, etc)

Community-based nutrition programs

Less intensive 2.00-5.00
More intensive 5.00-10.00 and
up
Feeding programs (per ‘000 cals/day) 70.00-100.00

Food subsidy programs (per ‘000 36.00-170.00

cals/day)

31
DM-2019
 COSTS OF INTERVENTIONS
ECONOMIC VALUE OF COSTS

• Economic costs represent the opportunity cost of using

resources and inputs in one intervention rather than in their
next best alternative use.
• In the economic valuation of intervention costs : include
base cost and physical contingencies; exclude price
contingencies, relevant taxes, duties, subsidies, and other
transfer payments; classify project components as tradable
or non-tradable.

32
DM-2019
 ECONOMIC VALUE OF BENEFIT AND COSTS
DISCOUNTING VALUE

• It is also very important to adjust future costs and benefits

through a procedure called discounting.
• The purpose and process of discounting is best described with
an example. Most people are familiar with the concept of gaining
interest on an investment.
• Discounting should be performed if benefits and/or costs occur
more than 1 or 2 years into the future.
• For preventive interventions, benefits are often realized far into
the future. Because these benefits are heavily discounted, they
may appear to be worth very little.

33
DM-2019
 ECONOMIC VALUE OF BENEFIT AND COSTS
PRESENT DISCOUNTED VALUE
DEFINITION AND FORMULATION
Compares the current value of what we would receive if we spend amount
of costs or receive amount of benefits over a given time period

If an amount of cost will be spent or amount benefit will be received in n

years from today (B/C) with interest rate computed annually at r percent per
annum, it’s present value (PV) is :
PDV = F / (1 + r)n 1 / (1 + r)n called as discount factor
If an annuity amount of cost will be spent or amount benefit will be received
for n years from today (A) with interest rate computed annually at r percent
per annum, it’s present value (PV) is :
1 - (1 + r)-n 1 - (1 + r)-n
PDV = A --------------- --------------- called as annuity factor
r r

34
DM-2019
 35
DM-2019
 36
DM-2019
 37
DM-2019
 38
DM-2019
 39
DM-2019
 40
DM-2019
 ECONOMIC VALUE OF BENEFIT AND COSTS
BASE ESTIMATE BENEFIT
Base Estimates of PDVs of Seven Major Classes of Benefits of
Shifting One LBW Infant to Non-LBW Status at 5% Discount Rate :

Benefit of Intervention PDV % of Column

1. Reduced infant mortality $ 92.86 16%

2. Reduced neonatal care $ 41.80 7%
3. Reduced cost of infant/child illness $ 38.10 7%
4. Productivity gain from reduced stunting $ 99.34 17%

5. Productivity gain from increased ability $ 239.31 41%

6. Reducing in cost of chronic desease $ 23.29 4%

7. Intergenerational benefits $ 45.12 8%
Sum of PDV of seven benefits $ 579.82 100%

41
DM-2019
 ECONOMIC VALUE OF BENEFIT AND COSTS
BASE ESTIMATE OF BENEFIT
Base Estimates of PDVs of Seven Major Classes of Benefits of
Shifting One LBW Infant to Non-LBW Status at 5% Discount
Rate :
Benefit of Intervention PDV % of Column

1. Reduced infant mortality $ 92.86 16%

2. Reduced neonatal care $ 41.80 7%

3. Reduced cost of infant/child illness $ 38.10 7%

4. Productivity gain from reduced stunting $ 99.34 17%
5. Productivity gain from increased ability $ 239.31 41%
6. Reducing in cost of chronic desease $ 23.29 4%
7. Intergenerational benefits $ 45.12 8%
Sum of PDV of seven benefits $ 579.82 100%

42
DM-2019
 COST-EFFECTIVENESS ANALYSIS
DEFINITION AND FUNCTION
• Cost Effectiveness Analysis (CEA) is one of the economic
method which can be used to evaluate effectiveness of health
and nutrition services.
• The CEA results can be used to plan for future programs or
evaluate on-going interventions in order to assist program
managers to identify ways to improve efficiency and
effectiveness of service delivery.
• CEA is a tool for identifying which health and nutrition
interventions alternative achieve the greatest level of benefit in
term of output, outcome or impact per unit of investment.
• For example, the analysis may compare the cost-effectiveness of
supplementary feeding intervention in order to improve nutrition
status of malnourished children among several alternative of
delivery system through puskesmas, posyandu or home visiting.

43
DM-2019
 COST-EFFECTIVENESS ANALYSIS
BASIC PRINCIPLES AND MEASURES
• The CEA is implemented under the assumption that the
interventions under evaluation and its alternative both produce
the same type of benefits that be measured in the same way
across alternatives.
• The output are measured as number of beneficiaries who
received a package of nutrition services in physical units, such
as the number of children get nutrition education, supplementary
feeding, etc.
• The outcome can be measured in a variety of ways such as
number of beneficiaries who prevented from malnourished, case
of low birth weight prevented, etc.
• The impact can be measured in term of number of death averted,
life-years gained, healthy life gained, disability adjusted, etc.

44
DM-2019
 COST-EFFECTIVENESS ANALYSIS
BASE ESTIMATE
Cost per death averted for nutrition investment, using
PROFILES methodology in US$ (Horton, 1999)

Deficiency
Countries
PEM Iron Vitamin A

Bangladesh 150 4,971 116

Cambodia 103 9,659 161

PRC 591 48,445 229

India 149 7,467 237

Pakistan 175 14,820 76

Sri-Lanka 1,112 93,714 493

Vietnam 298 48,862 282

45
DM-2019
 BENEFIT-COST ANALYSIS
BASIC PRINCIPLES
• Benefit-cost analysis theoretically can be used to assess
whether a program or policy intervention is a worthwhile
investment in and of itself, without comparison to other
programs. It also can be used to compare interventions and
policies.
• Traditionally, benefits as well as costs are valued in monetary
terms. This feature distinguishes cost-benefit analysis from cost-
effectiveness analysis in which benefits are measured in their
natural units.
• Cost-benefit analysis is used to determine whether the
benefits of a program measured in dollars outweigh its
costs and thus justify the allocation of resources to that program.
The most common indices in cost-benefit analysis are the
present value of benefit-cost ratio (BCR), net benefits (NPV), and
internal rate of return (IRR).

46
DM-2019
 BENEFIT-COST ANALYSIS
MEASURES OF BCA
• The economic benefits of the project as a health and nutrition
project can be identified and valued, so it is possible to subject
the project to a full cost-benefit analysis in which the values of
health benefits are compared with project costs.
• Three criteria are commonly used to aggregate and compare
benefits and costs: 1) economic net present value (NPV), 2)
economic benefit-cost ratio (BCR), and 3) internal rate of
return (IRR).
• It has been the standard practice for ADB to use the IRR criterion
because not all investment opportunities are evaluated together
and compared in terms of economic net present value. Thus,
EIRR ensures that at least the project creates net benefits in
excess of a discount rate representing the next best alternative
project in the economy.

47
DM-2019
 BENEFIT-COST ANALYSIS
MEASURES OF BCA
NET PRESENT VALUE (NPV)
Refers to the difference between discounted value of cost and discounted
value benefit accruing throughout the impact period of intervention
consideration at a fixed rate of interest

n n
NPV =  PV(Bt) -  PV(Ct)
t=0 t=0

Decision criteria :
- Accept project with NPV greater than or equal to zero
- Prioritize project alternatives from highest to lowest NPV
As long as we are concerned with a one or more intervention whose costs
are the same, the NPV criterion is adequate
In a situation of more than one alternative intervention with different costs,
NPV as an absolute measure fails to provide a correct choice, and
alternative measure which is commonly used is BCR (Benefit Cost Ratio)

48
DM-2019
 BENEFIT-COST ANALYSIS
MEASURES OF BCA
BENEFIT COST RATIO (BCR)
Refers to the ratio between discounted value of cost and discounted value
benefit accruing throughout the impact period of intervention consideration
at a fixed rate of interest

n n
BCR =  PV(Bt) /  PV(Ct)
t=0 t=0

Decision criteria :
- Accept intervention with BCR greater than or equal to one
- Prioritize intervention alternatives from highest to lowest BCR
As long as alternative intervention are not mutually exclusive (implementing
one necessarily precludes implementing another), the BCR measures is
adequate
In the case of mutually exclusive intervention, the BCR can lead to the
erroneous choice, and can be avoided by using the NPV measure

49
DM-2019
 BENEFIT-COST ANALYSIS
MEASURES OF BCA
INTERNAL RATE OF RETURN (IRR)
The discount rate (r) that makes NPV equal zero or BCR equal one.
Represents the average earning power of the investment used in the
particular intervention over the impact period of intervention.
| NPV1 |
IRR = r1 + (r2 – r1) ------------------------
| NPV1 | - | NPV2 |
Decision criteria :
- Accept intervention with IRR greater than or equal to the
opportunity cost
- Prioritize intervention alternatives from highest to lowest IRR

As long as alternative intervention have the same cost & life-span, and not
mutually exclusive, the IRR criterion is adequate
IRR ensures that at least the project creates net benefits in excess of a
discount rate representing the next best alternative project in the economy

50
DM-2019
 BENEFIT-COST ANALYSIS
BASE ESTIMATES
Base Estimate of Benefits and Costs for Intervention Related to
Hunger and Malnutrition According to Behrman, Alderman, Hoddinott
(2004) :
Interventions and Benefits ($) Costs ($) Benefit Cost Discount
Targeted Population Ratio Rate (%)

1. Reducing LBW for pregnancies with high probabilities LBW

a. Treatments for 580–986 200–2,000 0.58–4.93 3–5

women with
asymptomatic bacterial
infections

b. Treatment for women 580–986 92–460 1.26–10.71 3–5

with presumptive STD

c. Drugs for pregnant 580–986 28–280 4.14–35.20 3–5

women with poor
obstetric history

51
DM-2019
 BENEFIT-COST ANALYSIS
BASE ESTIMATES
Base Estimate of Benefits and Costs for Intervention Related to
Hunger and Malnutrition Accoding to Behrman, Alderman, Hoddinott
(2004) :

Interventions and Benefits ($) Costs ($) Benefit Cost Discount

Targeted Population Ratio Rate (%)
2. Improving infant and child nutrition in populations with high prevalence of
child malnutrition
a. Breastfeeding 5,952–8,929 133–1,064 5.6–67.1 3–5
promotion in
hospital
b. Integrated child 376–653 40 9.4–16.2 3–5
care programmes
c. Intensive pre- 1.4–2.9 3–5
school programme
with considerable
nutrition for poor
families

52
DM-2019
 BENEFIT-COST ANALYSIS
BASE ESTIMATES
Base Estimate of Benefits and Costs for Intervention Related to
Hunger and Malnutrition Accoding to Behrman, Alderman, Hoddinott
(2004) :

Interventions and Benefits ($) Costs ($) Benefit Cost Discount

Targeted Population Ratio Rate (%)
3. Reducing micronutrient deficiencies in populations in which they are
prevalent
a. Iodine (per woman 75–130 0.25–5.0 15–520 3–5
of child bearing age)

b. Vitamin A (pre- 37–43 1–10 4.3–43 3–5

school child under
six years)

c. Iron (per capita) 44–50 0.25 176–200 3–5

d. Iron (pregnant 82–140 10–13.4 6.1–14 3–5

53
women)
DM-2019