6.1         INTRODUCTION AND LEARNING OBJECTIVES

The focus of social value analysis is comparing a project’s impacts in monetary terms to financial input. This module aims to explain how impacts that have been previously quantified, as shown in modules M4 and M5, can be depicted in monetary units. This is especially important when there is either no market price for valuation impacts in money terms or when the market prices do not represent an adequate value – as in the cases of various market imperfections. 

The module illustrates several possibilities for the monetisation of non-market goods by proposing various valuation methods based on costs, preferences, or secondary data. It is shown that while cost methods build on damages of the analysed intervention or damages prevented by the analysed intervention, the preference methods measure self-valued (stated) preferences of individuals in virtual markets or their past behaviour in actual markets. The advantages and disadvantages of the presented methods are also discussed from the perspective of the required financial and other resources related to each method’s usage.

Finally, the module provides the main principles for selecting the most suitable method of monetisation of impacts, and points out the main challenges and practical applicability of the described methods of monetisation.

6.2         CONTENT

1.       Purpose of monetizing impact

2.       Monetisation of quantified impacts

2.1.   Why to monetize and when not to monetise

2.2.   Why not to use market prices

2.3.   Alternative valuation methods

3.     Methods of monetising

3.1.   Cost-based monetisation

3.2.   Revealed preference-based

3.3.   Stated preferences based

3.4.   Other methods of monetisation

3.5.   Selection of the most suitable method for monetisation of impact

4.       Valuing inputs

4.1.   Opportunity costs of inputs

4.2.   Correction of input prices

4.3.   Price of volunteering

6.3         LEARNING OUTCOMES

After completing this module, the participants are able to:

–      explain the purpose of monetizing the impact;

–      identify when it is necessary to do it;

–      list different methods to monetize impact;

–      describe the basic characteristics of the methods.

6.4         TEACHING METHODS

Lectures, demonstration through case-study analysis, discussion, group or individual practical work on case studies, presentations.

Possibility of blended learning and flipped classroom: lectures and demonstration of case studies online; discussions, practical work, and presentations offline.

6.5         ASSESSMENT

Assessment and feedback is based on the case-study work and presentation by participants.

6.6         STUDY MATERIALS

–      Lecture slides

–      Case studies

–      Then et al. (2017). Social Return on Investment Analysis. Measuring the Impact of Social Investment. Chapter 8

–      The Guide to Social Return to investment (2012), The SROI Network. Stage 4

–      Arvidson, M., Lyon, F., McKay, S., & Moro, D. (2010). The ambitions and challenges of SROI. Working Paper. TSRC, Birmingham.