RFQ Attachment J1 IllustrativeCallOrderSoW.pdf

Attachment J.1.

Illustrative Call Order Scope of Work under the Blanket Purchase Agreement for

Economic Analysis Services

C. Introduction

The Millennium Challenge Corporation (MCC) is an innovative and independent U.S. foreign aid agency that is helping lead the fight against global poverty. MCC's mission is to reduce poverty through economic growth. Created by the U.S. Congress in January 2004 with strong bipartisan support, MCC focuses on good policies, country ownership, and results. MCC provides time-limited grants promoting economic growth, reducing poverty, and strengthening institutions.

In December of each year, MCC's Board meets to consider selection of partner countries from the pool of countries that have passed or are close to passing the Country Scorecard. If a country is selected as eligible for grant funding from MCC, MCC and the country government will develop projects that address identified binding constraints to economic growth and are expected to meet standards of economic returns and other agency objectives. The program development process culminates in the approval and signing of a Compact or Threshold program. Programs then undergo a preparatory phase before they enter into force. Entry into Force marks the start of the fixed five-year implementation period for all Compact programs (Threshold programs are generally implemented for a shorter period).

The purpose of this blanket purchase agreement (BPA) call order is to allow MCC to quickly and efficiently engage external experts who would support specific economic analyses for program development as well as help advance other methodological and analytic work.

C.2. Scope

The contractor will provide analytical and sector expertise relevant for the following activities:

• Task 1. Support for constraint analysis and growth diagnostics

• Task 2. Facilitation of country engagement using problem-driven iterative adaptation (PDIA) approach during MCC’s program development process

• Task 3. Developing the health sector CBA guidance

• Task 4. Incorporating climate change and greenhouse gas emissions considerations into CBA

C.3 Roles and Responsibilities

C.3.1 MCC

Within MCC, the primary client for the illustrative call order will be one or more members of DPE/EA staff who are expected to be the Project Monitors (PMs) for the order, and typically will conduct quality reviews of all delivered products. The primary client is not authorized to change the scope of a Call Order independently of MCC’s designated Contracting Officer (CO). All changes in scope, particularly those implying increases in level of effort, require the approval of the CO. For contractors, the principal point of contact within MCC regarding contract administration will be a delegated Contracting Officer’s Representative (COR).

C.3.2 Contractors

Contracted experts in the performance of their assignments will adhere to formal guidance that MCC has established within the institution for the economic analysis of investments. The contracted expert may offer innovative approaches and cutting-edge analytic practices for MCC’s consideration so that the agency can benefit from recent advancements in methodology and practice that are not already captured in the formal guidance. Where applicable, contractors will adhere to MCC guidance pertaining to the identification and disaggregated characterization of the beneficiaries of investments.

C.4 Tasks

Overview

The Millennium Challenge Corporation (MCC) is a U.S. Government corporation whose mission is to provide assistance that will support poverty reduction through economic growth in countries that demonstrate a commitment to just and democratic governance, economic freedom, and investments in their citizenry. For more information on the MCC, please visit www.mcc.gov.

The following tasks touch upon the activities that MCC undertakes to achieve mission objectives through the agency’s engagements with country partners.

C4.1. Task 1. Support for constraint analysis and growth diagnostics

Introduction

MCC program development begins with MCC and our partner government jointly selecting one or more “binding constraints” around which to develop the compact. MCC introduced the process of a constraints analysis (CA) to avoid the dilution of development assistance and to improve the likelihood of impactful investments. The CA is a framework for formulating growth strategies that are based on solid economic reasoning and are operational for practical application. The goal for the CA is to identify the costliest constraints on economic activity (in environments where many constraints exist). Each such constraint indicates potential areas for high-payoff policies/investments.

The figure below provides a framework for discussing the role of the CA process at MCC. It illustrates that MCC endeavors to work in the overlap between:

• Things MCC can do: The types of activities MCC can engage in are limited by the timeframe of compacts and areas of MCC’s competence. For example, constraints like crime or exchange rate policy may not be appropriate for a bi-lateral donor to engage.

• Things our country partners want to engage on: To be successful, compact investments should align with a Country’s priorities, especially when engaging in PIR.

• Most binding constraints: MCC recognizes that addressing the root causes of binding constraints maximizes our ability to reduce poverty through growth.

*Not to Scale

While identifying the set of most binding constraints is the primary output, the CA process also provides additional benefits such as enhanced country ownership. A 2010 study by Anderson, Osborne, and Breitbarth surveyed country-team leads and economists from both MCC and our partner countries about the CA. The results provide additional insight and leads to the following list of benefits of the CA process:

• A substantive, enriched understanding of a country’s economy

• Enhanced country ownership

• A focus during project development on growth priorities and disciplines the conversation around a shared understanding of the country’s economy

• Highlight policy and institutional reform issues

Overview of Implementing a CA

The purpose of a CA is to identify a policy strategy that is likely to induce private investments across broad segments of an economy, and ultimately economic growth that supports poverty reduction. The methodology considers distortions with the largest direct impact to minimize second-best interactions. The underlying assumption is that the inputs required by the production process tend to be more complements than substitutes. Therefore, among all different production factors, the one most likely having the largest direct impact is the one in relatively shorter supply – this factor is called the binding constraint. The most important implication of the framework is focusing governments’ limited resources and capability on solving or alleviating the most binding constraint. Investments in one factor, such as human capital, can only stir investments when other complementary production factors are available at an appropriate level.

A policy strategy must prioritize action rather than following a laundry-list approach in the hope that wholesale reform will eventually lead to change.

In practice the structure of a CA generally follows scheme of the following decision tree. Broadly, the analysis examines whether the cost of finance is exceptionally high to inhibit profitable investments from being undertaken, or whether, in the absence of abnormal financial disincentives, there are too few profitable investment opportunities. The relative scarcity of investment opportunities may result from a lack of necessary complementary infrastructure and human capital that would render feasible investments to be profitable. It might also be the case that conditions intrinsically warrant the feasibility of profitable activities but other factors, primarily policy-related, inhibit the appropriability, or realization, of the profitability of those activities by investors, whether they are business of various scales, or households.

The CA generally attempts to identify the severity of a constraint through the application of the following four principles or tests, which are labelled:

• Price: The (shadow) price of the constraint should be high

• Changes vs. Changes: The constraint should be correlated with investment/growth

• Bypassing the Constraint: Economic actors undertake costly measures to circumvent the constraint

• Camels vs. Hippos: Activities less intensive in the constraint are more likely to survive

The Price Test considers whether cost of accessing a necessary input for the profitability of a broad range of feasible investments is high. This is usually done with the use of benchmarking against a suitable set of peer economies (comparators).

The Changes vs. Changes Test assumes that changes in investment behavior would follow changes in the level of a constraint, if that constraint is indeed binding. This test therefore seeks to detect signals of the severity of possible constraint with the use of various approaches to time series analysis.

The Bypassing the Constraint Test considers evidence that economic actors are actively behaving in ways to avoid the limitations imposed by a binding constraint. This is an eclectic test whose significance relies on the prevalence and scale of similar behaviors across economic actors.

The following graphic provides some examples of applying this test.

What Constrains Private Investment and Entrepreneurship?

Low Returns to Economic Activities

Low Appropriability

Macro Risks

Micro Risks

Market Failures

Innovations

Low Intrinsic Returns

Natural Capital

Human Capital

Infrastructure

High Cost of Finance

Costly Local Finance

Low Savings

Costly intermediation

Costly Foreign Finance

The Camels vs. Hippos Test looks at the nature of the most successful parts of the economy to assess the constraints that affect others. We would expect that those who are either structurally less intensive in the constraint, or at least more able to bypass it, will be doing comparatively well. Conversely, those sectors most intensive in the constraint will be doing relatively poorly. The name derives from an analogy of seeing camels and not hippos as flourishing fauna in a desert. For example, if electricity were a constraint, one might find many businesses that minimally rely on power as an input and none that are intensive in its use.

Examples of past CAs are available on MCC’s website.

Constraints will generally exhibit themselves through one or another of these tests. Binding constraints are more likely than not to reveal themselves across all four tests multiple times. Unsurprisingly, the application of a CA is data-intensive exercise that requires some skill in identifying the sources of relevant signals as well as their interpretation. In the past MCC has been fortunate to have had opportunities to partner with academic institutions to have access to sources of data that are not widely available and to share the analytic burden. The purpose of this task is to allow MCC to replicate the utility of these past experiences by acquiring external technical assistance as needed when country programs enter MCC’s portfolio.

Task Objective

MCC seeks a contractor to provide services to assist the compilation and analysis of data contributing to the implementation of CAs for Threshold and Compact Programs.

Task Breakdown

As directed, the contractor will apply the Growth Diagnostics (GD) approach from Hausmann, Rodrik and Velasco (2005)1 across designated nodes in the diagram above to identify the binding constraints to growth along with the appropriate policy options to address the constraint. The contractor should also be

1 https://growthlab.cid.harvard.edu/publications/growth-diagnostics-0 https://growthlab.cid.harvard.edu/publications/growth-diagnostics-0 familiar with the Mindbook of Hausmann, Klinger and Wagner (2008)2, and MCC’s extensions of this text.

In the implementation of a CA using GD approach the contractor will be engaged in:

1. Data collection. This task will entail accessing publicly available datasets, but also in-country sources (for example, statistical agency and central bank data) that may require permission to use. It is possible that under certain circumstances data collection might require country travel.

The contractor might consider the use of proprietary datasets with prior consent of MCC.

2. Data analysis. The contractor is expected to undertake, descriptive, diagnostic, and predictive analysis of data using Stata, but the use of Excel, R or Python would also be acceptable. In all circumstances, the contractor will provide code files to document use of a software platform. In the case of the use of Excel, the contractor will provide unlocked workbooks including macro code.

3. Data visualization. Wherever possible, the contractor will utilize graphical techniques to convey information from data clearly and effectively to primary users of the CA: MCC staff within country teams as well as managers (not all of whom are professional economists), partner country counterparts, and other stakeholders. It may be appropriate to generate data visualizations that are tailored to different audiences.

4. Report generation. The contractor will document the principal results of the undertaken analysis in a set of PowerPoint slides and in a separate written narrative. The written narrative will provide additional background information regarding the rationale and utility of the analysis, as well the mechanics of its implementation.

C.4.2. Task 2. Facilitation of country engagement using problem-driven iterative adaptation (PDIA) approach during MCC’s program development process

Introduction

A key aspect of MCC’s model is country ownership. Country ownership helps ensure that projects have local input to improve their design, enhance their effectiveness, and promote the sustainability of our impact after the end of MCC compacts. The goal of this procurement is to provide facilitation and related resources to our country partners to promote their engagement in compact development.

Overview of MCC Program Development Following the CA

MCC program development begins with MCC and our partner government jointly selecting one or more “binding constraints” around which to develop the compact. A “root cause analysis” (RCA) follows and seeks to understand the underlying drivers of the constraint. For example, if a binding constraint is “unreliable electricity” the RCA would explore what drives the unreliability of electricity. It would consider technical questions such as the relative roles of generation, transmission, and distribution in causing outages. It would also consider deeper institutional issues such as the ability of a utility to fund and perform maintenance or the social norms around paying for electricity.

Good problem analysis during this stage helps target interventions on issues that have the highest chance of addressing the constraint. Effective problem analysis also helps drive creative thinking about solutions and avoid cut and paste interventions from other contexts that might not be fit for local circumstances.

The RCA phase of project development culminates in concept notes that outline key areas for intervention. While the concept note marks a nominal transition from problem analysis to solution identification, the examination of problems should not be treated as a one-off exercise, and our understanding of problems must continue to evolve throughout program development. Increasing local

2 https://www.hks.harvard.edu/centers/cid/publications/faculty-working-papers/doing-growth-diagnostics-practice https://www.hks.harvard.edu/centers/cid/publications/faculty-working-papers/doing-growth-diagnostics-practice stakeholder engagement and ownership throughout compact development can help to ensure that our understanding of root causes can evolve as active engagement with local stakeholders reveals the problem’s historical context and other possible idiosyncratic elements.

Following the concept notes, teams develop a framework for the program logic for each project and activity, presented in the Project Proposal Assessment Memorandum memo. After this milestone, the team transitions from solution identification to project design, culminating in a compact proposal presented in the Investment Memo. Throughout this process, the compact development team continues to apply lessons learned from active engagement with local stakeholders, pilot projects, and specialized international consultant services purchased by MCC to further refine the problem analysis, solution identification, and project design.

For a more detail on compact development see here: https://www.mcc.gov/resources/doc/guidance-compact-development-guidance

Task Objective

MCC seeks a contractor to provide services that help our country partners engage fully and constructively during compact development. The role of the contractor is not to provide specific expertise related to a constraint, but rather to facilitate the engagement of country partners through coaching, mentoring, managing, and related support that promotes maximum engagement of officials from our partner government (or other local stakeholders).

This facilitation may be useful at any stage but is particularly relevant for the root cause analysis (RCA) stage of compact development. Many of the key root causes of a constraint are best identified and understood through robust, active engagement with local stakeholders. Researching and uncovering the key drivers of a constraint often requires a focused engagement over time with our partner governments or other local actors. Such engagement of local actors may take the form of a working group that is established after our partner country determines which of the potential constraints they would like to pursue. In this case, the contractor would provide facilitation for the working group to engage in ongoing, iterative, and action-oriented research to define the problems that lead to the outcome in question.

Task Breakdown

MCC would like the contractor to identify and propose alternative or additional tasks as needed to address unique contexts and different approaches to facilitation. The following list of tasks is indicative of how a contractor would be expected to support in-country working groups.

1. Facilitate working group meetings: The contractor will facilitate regular (weekly or bi-weekly) meetings. During these meetings the contractor will need to employ public administration and management skills that help the team to:

a. Identify and break down problems into manageable and viable starting points

b. Help with work planning

c. Assess team progress

d. Identify impediments and facilitate problem solving as necessary.

2. Individual support to team members: The contractor may need to provide mentoring and/or coaching for individuals as needed to address particularly challenging obstacles. However, the contractor is not expected to provide extensive support to individual team members between meetings.

3. Document progress and challenges: The contractor will maintain documentation of meetings, issues, and progress made between meetings.

The working group and facilitation may extend beyond the RCA to support subsequent phases of program design.

https://www.mcc.gov/resources/doc/guidance-compact-development-guidance https://www.mcc.gov/resources/doc/guidance-compact-development-guidance

3.4.3 Task 3. Developing the health sector CBA guidance

Introduction

MCC is required by its statutory regulations to conduct cost benefit analysis (CBA) and to calculate the economic rate of return (ERR) on projects supported through country compacts. ERRs form a critical part of the project approval process and are required to equal or exceed a threshold level of ten percent over the medium term. To clarify the CBA methodology and to improve the consistency across country compacts, the Economic Analysis division, which is responsible for estimating ERRs, is developing a series of reports outlining methodology for each major investment sector. These reports, called Sector- Consistent Design Patterns (SCDPs), have been produced for land, water and sanitation, power, and transportation projects. A SCDP for health sector projects remains to be developed.

Overview of SCDPs

The ‘design pattern’ concept derives from software programming and refers to general, reusable solutions to coding problems in particular contexts. The idea has its origins in architecture, and it is the quotation of Christopher Alexander3 that appears in Gamma, Helm, Johnson and Vlissides4 that served as the inspiration for the use of the term at MCC:

“Each pattern describes a problem which occurs over and over again in our environment, and then describes the core of the solution to that problem, in such a way that you can use this solution a million times over, without ever doing it the same way twice.”

The development of Sector-Consistent Design Patterns, or documents guiding the application of CBA in specific sectoral or development contexts, was a reaction to early calls within MCC to fully standardize the economic analysis of projects in a set of spreadsheets. To speed the development of programs it was proposed that template spreadsheets could be developed where all that would be needed for the economic analysis of projects within the same sector across country programs would be the insertion of values in the cells for principal parameters, and the spreadsheet, once recalculated, would return the necessary result (the estimated ERR). In practice, no application of project analysis has been so simplistically mechanistic. Some elements of the analysis of road investments might be presented this way, but not the essential task of the analysis, which is to determine how behavior with respect to road use is expected to change. Different contexts will demand differentiated solutions; although, fundamental principles described in the CBA guidelines should organize the analyses throughout.

In software programming a design pattern has four elements:

1. An identifier that conveys the essence of a pattern succinctly. This assumes a certain taxonomy of situations that are relevant for consideration.

2. The problem and context to which the pattern applies, including conditions that under which it makes sense to apply the pattern. The correspondence to MCC’s work is straightforward.

3. The elements that make up a solution at an abstract level. For our work this is where we would state the features, behaviors, theories of change that are the principal foci of analytical work for the context, data requirements, the responsibilities of economists and the responsibilities of counterparts and other technical experts, basic modeling approaches, model elements and how they should be implemented in spreadsheets and the representation of uncertainty. In short, the

3 Alexander Christopher, Sara Ishikawa, Murray Silverstein, Max Jacobson, Ingrid Fiksdahl-King and Shlomo Angel.

A Pattern Language. Oxford University Press, New York, 1977.

4 Gamma, Erich, Richard Helm, Ralph Johnson and John Vlissides. Design Patterns: Elements of Reusable Object- Orient Software. Addison Wesley, New York 1995.

design pattern would describe what is best practice, or, good practice that best approximates best practice.

4. The consequences of results of applying the pattern. In programming, the results also refer to the trade-offs of applying the pattern. This would be applicable in MCC’s work as well, as there may be costs in terms of time and resources required to apply the pattern in analysis, how well beneficiary numbers can be estimated, the observability of impacts upon incomes for results reporting, etc.

All SCDPs essentially have the following elements, which have been adapted from Gamma et al:

• Name and classification, if relevant, of the pattern.

• Intent. A short description of the rationale and the problem that the pattern addresses.

• Motivation. A scenario that typifies the problem the pattern addresses and how the pattern addresses the problem.

• Applicability. A description of the situation in which the design pattern can be applied and when it should not.

• Data requirements and roles of country counterparts, MCC staff and engaged technical experts.

• The theory of change underlying the economic model that implements the pattern.

• Implementation. Description of how the pattern should be implemented as a spreadsheet model, features, possible pitfalls, flow of logic for estimation of particular costs or benefits, structure of presentation, etc.

• Consequences. Discussion of the trade-offs and results of using the pattern and implications for the use of economic analysis as a management tool while implementing the investment that is the object of the analysis.

Task Objective

MCC seeks a contractor to assist the development of Cost Benefit Analysis guidance for projects in the health sector that complements guidance documents that have already been drafted for other sectors.

Such guidance would also adhere to the fundamental approach of MCC’s economic analysis projects, which accounts for benefits and costs in income, or income equivalent, terms. This income numéraire approach reflects MCC’s overall mission to invest in ways that lead to the realization of incremental net income and economic growth trajectories in support of poverty reduction.

Task Breakdown

MCC would like the contractor to assist the drafting of a health SCDP, which will be peer reviewed within and outside MCC. A complete list of tasks required to provide this deliverable will be subject to further co-creation between MCC and the contractor, but they are likely to include the following:

1. Literature Review: Review existing literature and guidance documents as required to inform the

SCDP

2. Development of a Taxonomy (or typology) of interventions: Working with past examples of MCC health projects and examples drawn from elsewhere, the contractor will structure a list of representative cases that will populate content of the methodological scope of the health SCDP.

3. Drafting of the health SCDP. The consultant will provide a draft document for review by MCC that will cover:

a. General approaches to the economic analysis of potential projects falling within the taxonomy (typology) of interventions treated under the guidance, including elaboration of the theories of change underlying the various types of interventions.

b. The appropriate estimation of project costs, which may include incremental periodic or recurrent costs of individuals.

c. Detailed estimation of benefits utilizing suitable income or income equivalent measures.

4. Presentational and training materials. The consultant will also assist the development of presentational materials to inform MCC staff and external stakeholders on the content of the guidance, and the drafting of training modules for MCC economists.

3.4.4 Task 4. Incorporating climate change and greenhouse gas emissions considerations into

CBA

Introduction

Considering climate change in cost-benefit analysis requires assessment of the impact of climate change on project performance, and the impact of project design features on emissions and their social cost— each of which may be significant or negligible for a particular project. While MCC continues to seek opportunities to improve assessments of the impact of climate hazards on project performance, this call order concerns the second category: Incorporation of the social cost of greenhouse gases (SC-GHG) into CBA, conditional on design and performance assumptions. The incorporation of relevant externalities in project analysis is not a novel concept at MCC, but the organization has not developed a dedicated approach and data structures for implementing a low-effort valuation of greenhouse gas emissions impacts, including distinctions between impacts on the partner country itself versus global impacts.

This task seeks to develop a streamlined process to check whether incremental changes in the social cost of GHG are negligible or non-negligible in the comparison of without- and with-project scenarios; and apply appropriate social cost of carbon estimates if they are non-negligible, and determine plausible estimates of local income externalities, or impacts upon ex ante and ex post economic growth trajectories.

Overview of Climate Issues for MCC Operations

MCC has recently clarified its principles for treatment of environmental externalities in cost-benefit analysis. An important element of these principles is that the impacts of environmental externalities should be disaggregated according to whether they accrue within a specific partner country or external to the country. Benefits in the former category are admissible in terms of assessing whether a project clears MCC’s hurdle rate investment criterion, whereas benefits that are external to the country should be presented for context, as part of a sensitivity case. In all cases, the determination of effort and, ultimately, inclusion of benefit streams is based on their expected magnitude and certainty relative to project costs and other benefit streams.

Task Objectives

This task aims 1) to develop a simple and low-effort protocol and dataset to be used by MCC economists (or consultants preparing MCC CBAs, collectively “CBA analysts” hereafter) that will allow them to assess whether global and local greenhouse gas impacts5 merit inclusion in a given CBA; and 2) for cases where inclusion is merited, provide a simple and low-effort protocol and dataset that will allow CBA analysts to include them as an impact stream in their cost-benefit analyses, assuming the existence of net GHG emissions streams provided by other modeling. It should be developed recognizing that MCC CBA analysts are generalists and may not have familiarity with climate change economics, beyond broad concepts such as environmental externalities and the social cost of carbon.

Task Breakdown

1) Literature Review of the Social Cost of Greenhouse Gases. Review publications (including grey literature) to ensure the products are informed by the latest available information on global and country-specific SC-GHG estimates. This should include a thorough assessment of:

5 Monetized using the social cost of greenhouse gases, hereafter SC-GHG

a. The general state of SC-GHG estimation (i.e., not limited to country-specific estimates) to include at minimum:

i. The stance of the U.S. Government Interagency Working Group on the Social Cost of Greenhouse Gases (beginning with February 2021 interim guidance,6 if it is not superseded at the time of contract performance, and beginning with any updates since then), Environmental Protection Agency, and Office of Management and Budget.

ii. Assessment of recent findings from the Resources for the Future Social Cost of Carbon workstream.7

iii. Recent advances in “impact pathway” modeling (such as work under the umbrella of the Climate Impact Lab8) and assessment of trends in findings compared to more “traditional” integrated assessment modeling (e.g., DICE/RICE, FUND, and PAGE).

iv. Other suggestions proposed by the consultant.

b. The state of country-specific and sub-continental9 SC-GHG estimation, including:

i. Critical review and reverse citation search on Ricke et al (2018)10

ii. Critical review and reverse citation search on Tol (2019)11

iii. Critical review and reverse citation search on Gazzotti (2022)12

iv. Assessment of impact-pathway research for applicability to consistent country-specific SC-GHG estimates.

v. Other suggestions proposed by the consultant.

2) Synthesis report and recommendations on SC-GHG valuation. Provide a brief synthesis-oriented literature review that describes at minimum:

a. A detailed comparison of the assumptions of Ricke et al, Tol, and Gazzoti, including an assessment of critiques of Ricke et al levied by Tol.

b. An assessment of the consistency of approaches to valuing the social cost greenhouse gases with other assumptions and modeling approaches used in MCC CBA, such as the CBA numéraire, indirect impacts, future growth assumptions. See also (f) regarding the discount rate.

c. A recommendation of which model specifications from Ricke et al, Tol, Gazzotti, or any other sources should be used to identify country-level SC-GHGs

d. Where the primary source for country-specific SC-GHGs is limited specifically to CO2 emissions, provide any recommendations on approaches for including values for other GHGs where feasible.

e. Consistency between country-level approaches and the state of the art for global SC- GHG approaches as assessed under #1a.

f. Implications of discounting assumptions underlying SC-GHG estimates and options to harmonize with MCC CBA in cases where SC-GHG estimates are not available for MCC hurdle or discount rates.

6 https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf 7 https://www.rff.org/topics/scc/ 8 https://impactlab.org/ 9 By sub-continental, we refer to SC-GHG estimates that may not be specific to every single country, but have resolution significantly below the continental scale, and near-complete coverage over the geographies in which MCC works or may work. An example here is that Computable General Equilibrium models will often lump several small countries, and we would not wish to exclude this type of study). It is not intended to include continent or region-specific standalone studies that are not harmonized across continents.

10 Ricke, K., Drouet, L., Caldeira, K., & Tavoni, M. (2018). Country-level social cost of carbon. Nature Climate Change, 8(10), 895-900.

11 Tol, R. S. (2019). A social cost of carbon for (almost) every country. Energy Economics, 83, 555-566.

12 Gazzotti, P. (2022). RICE50+: DICE model at country and regional level. Socio-Environmental Systems Modelling, 4 18038 https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf https://www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf https://www.rff.org/topics/scc/ https://impactlab.org/

3) Guidance on Determining Appropriate Level of Effort for Project Analysis. Develop a screening tool for MCC CBA analysts to determine whether GHG impacts merit inclusion in a CBA, assuming the economist has developed or otherwise been provided with an initial and approximate trajectory of net GHG emissions estimates attributable to a project. The tool must at minimum address CO2 emissions, and ideally will address others such as methane and nitrous oxide, if feasible. More specifically, this tool should provide a low-effort approach for the economist to answer two questions:

a. Is there non-negligible potential for the present value of global GHG impacts to be significant in magnitude compared to anticipated present value of project costs?13

b. Is there non-negligible potential for the present value of the own-country GHG impacts to be significant in magnitude compared to anticipated present value of project costs?

4) Operational Guidance on Estimating Project Benefits. Develop protocol and any associated data products (e.g., Excel template spreadsheets containing formulas, or at minimum tables containing year and country specific SC-GHG values) necessary for an MCC CBA analyst to value own-country and global GHG impacts for a project in any potential MCC country, assuming the economist has developed or otherwise been provided with a trajectory of net GHG emissions estimates attributable to the project. The protocol must at minimum address CO2 emissions, and ideally will address others such as methane and nitrous oxide, if feasible. Where significant gaps exist between global values implied by country-specific studies and the global SC-GHG values recommended by the US Government, the product should include one or more options for harmonization, and ensure the uncertainty is clearly represented.

5) Presentational and Training Materials. The consultant will also assist the development of presentational materials to inform MCC staff and external stakeholders on the content of the guidance, and the drafting of training modules for MCC CBA analysts.

13 Ideally the tool will be flexible for arbitrary thresholds of “significant” but 20%/5% (global/local) of the present value of project costs, or 2/0.5 (global/local) percentage point shift in economic rate of return may be considered as indicative values.

Task Breakdown