The economic evaluation of crop research proposals

Abstract

This paper describes a simple evaluative procedure that scientists can use to measure the relative profitability of crop research proposals. The procedure used a series of questions about the expected benefits and costs of projects. The resultant cash flow budgets were then subjected to a standard investment evaluation procedure called discounted cash flow analysis. The measures of profitability used were the net present value (NPV) and the internal rate of return (IRR). An evaluation of 17 project proposals for legume research in central Queensland gave IRR values ranging from negative to 147%. The NPV ranged from -$A189000 to +$14.5 million. This range of profitability is probably typical of research proposals for rural industries. It demonstrates the worth of evaluating proposals so that only the most profitable projects are funded. This procedure was easy to use and was well accepted by most scientists. The inclusion of economic evaluations, as described here, with applications for rural research funds is expected to strengthen the case for and improve the chances of funding.