Incremental Costs
GEF funds the "incremental" or additional costs associated with transforming a project with national benefits into one with global environmental benefits; for example, choosing solar energy technology over coal or diesel fuel meets the same national development goal (power generation), but is more costly. GEF grants cover the difference or "increment" between a less costly, more polluting option and a costlier, more environmentally friendly option.
The approach in determining incremental cost consists of five steps that simplify the process of negotiating incremental costs, clarifies definitions, and links incremental cost analysis to result-based management and the GEF project cycle. The steps are as follows:
(a) Determine the environmental problem, threat, or barrier, and the
“business-as-usual” scenario (or: What would happen without the
GEF?);
(b)
Identify the global environmental benefits (GEB) and fit with GEF
strategic programs and priorities linked to the GEF focal area;
(c) Develop the results framework of the intervention;
(d) Provide the incremental reasoning and GEF’s role; and
Operational Guidelines for the Application of the Incremental Cost Principle (2007)
Other Council Documents
Program for Measuring Incremental Costs for the Environment (PRINCE)
Standard Reporting Format for Incremental Cost
Streamlined Procedures on Incremental Cost Assessment
Paradigm Case Illustrations of Incremental Cost Analysis
Designing Projects within the GEF Focal Areas to Address Land Degradation: with Special Reference to Incremental Cost Estimation
Other Recommended Documents
Report on Incremental Costs
Note on Incremental Costs
Progress on Incremental Costs