An appraisal exercise intimately connected with the evaluation of environmental feasibility is the assessment of the project’s impact on the lives of people that live and work in the project’s area of influence.
The social impact analysis (or social feasibility assessment) can be a very important part of the general appraisal of PPP projects, since many infrastructure initiatives cause severe adverse impacts on communities surrounding the site on which they are implemented.
Social impact analysis is an exercise aimed at identifying and analyzing such impacts in order to understand the scale and reach of the project’s social impacts. It also ensures that these impacts are mitigated, to the extent possible, and fully considered in the green light decision.
Social impact analysis greatly reduces the overall risks of the project, as it helps to reduce resistance, strengthens general support, and allows for a more comprehensive understanding of the costs and benefits of the project.
However, social impact analysis can be expensive and time consuming, so the full analysis process cannot be justified for all projects. At a minimum, all projects demand a review of project data at the Appraisal Phase, so as to identify if material social impacts exist. If they do, a full social impact analysis should be conducted.