You may combine these valuing systems or use just one when estimating monetary benefits of program outcomes. Fair assessments of what many people may be willing to pay can be a good guide for estimating these monetary values. Being realistic when valuing any product or service will add credibility to program benefit assessments.

In assessing values of program benefits, decide which products to value. Those values of benefits that are directly related to the program objectives will generally be easier to make and more acceptable for accountability purposes than attempting to extend benefits to secondary audiences or situations. In making these assessments, consider using the feedback or testimony of clients or other knowledgeable sources. Some information can be obtained from a representative sample population and extrapolated to a larger population, or you can analyze available data, which can often provide concrete information that can be easily valued.

While some program outcomes may indeed be rather easily valued, other benefits may be more difficult :o measure and to apply direct values to. In these cases, factors such as shadow pricing, opportunity costs, spillover, or external valuing may provide the best support for determining the value of benefits. Each of these indirect valuing factors are discussed briefly, below.

Shadow Pricing - This system is used when placing a value other than market price on program outcomes. Program outcomes that cannot be bought or sold, such as social value, can, with some effort, be ascribed a monetary value. While it can be difficult to construct good shadow prices, some items may have been studied sufficiently to provide accurate information that can be used in program valuing by shadow pricing. For example, the current cost of incarceration is about $100 per person per day. When 4-H leadership programs significantly reduce crime rates for participants as compared to nonparticipants, this shadow price can be used as a means of determining estimated savings to society. Or, for another example, consider a 4-H leadership program that directly influences participants who otherwise would not have done so to continue their formal education beyond high school. By gathering information available about income differences between college graduates and high school graduates, you could use shadow pricing to effectively predict a value for this program's results. Be reasonable and realistic when applying the principles of shadow pricing so that you avoid overly optimistic or highly inflated estimates of program benefits.

Opportunity Costs - This means of estimating value focuses on establishing a value of alternative opportunities or resources that were used or lost. For example, if one spent an entire day getting a car repaired, the time spent for this imposition could be valued in terms of what the individual could have otherwise done with the time. Perhaps the essentially wasted time used for the task of taking the car to the garage, sitting and waiting, and returning home could have been used by a salesperson for making several calls. The missed sales opportunities can be calculated as opportunity costs. From an Extension perspective, a program that educates a farmer about benefits of leasing equipment versus purchasing may result in the farmer using the available annual savings for other more productive gains. The value of the program can, therefore, be calculated by determining benefits the farmer accrued as a result of these savings.

Spillover - This means of placing a value on program benefits takes into account not only direct benefits resulting from the program, but also other situations or circumstances indirectly affected. Perhaps one of the best examples of spillover effects is the reduction in residential real estate values near airports with increased air traffic. The increased noise levels make for less pleasant living conditions in the nearby areas; therefore, values of homes in those areas decline.

As an example of how spillover can apply to Extension programs, consider a community development program that helped to create 10 new jobs; the direct effect is the increased income to those individuals. The spillover effect is the increased level of consumption, which has an impact on the local economy, such as restaurants, building supplies, theaters, and others These economic benefits are often estimated to range from an additional value of $3 to $6 for each dollar increase in income resulting from the new jobs. Remember, too, that spillover costs can also result, such as the increased costs to taxpayers for building new roads to the location or of providing increased services for the individuals involved, such as greater waste handling. Therefore, in calculating the ultimate spillover benefits, remember to take into account both increased costs as well as value. Information relating to economic development costs and benefits can be easily obtained from economic development officials as well as local and state government officials.

Twenty-five farmers reduced fertilizer use by 100 pounds per acre of actual nutrients applied on 3,500 acres of corn with no change in yield. Applied cost per pound averages $.15.

3,500 x 100 x .15 = $52,500 direct benefits

Indirect Benefits Valued

The state environmental agency estimates that each pound of nitrogen added to a stream causes $3 in environmental damage. If one-third of the actual nutrients applied is nitrogen and an estimated 10% of the unneeded nitrogen would have been carried away by surface runoff, we can calculate a secondary benefit for our program:

3,500 x 100 x .33 x .1 x $3 = $34,650 in secondary benefits

Discussion

With these calculations, we are now in a position to state that our successful program in soil testing returned a direct benefit to farmers of $5 for every $1 ($52,500 - $10,500) that was invested in the program. In addition, society as a whole received more than $3 in environmental benefits for every $1 invested in the program.